An Investment Strategy to Profit from the Legalization of Marijuana
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An Investment Strategy to Profit from the Legalization of Marijuana

Should pot be legal for taxation purposes?

We haven’t reached a point where corporations own swathes of cultivated fields that produce a semi-annual crop worth billions of dollars. A crop that can be taxed by the government on tobacco rates (18-24%), that could create spin-off industries, and can be grown in two separate methods, one for recreational/medicinal use, and the other as industrial. George Washington and Thomas Jefferson grew hemp, so if the founding fathers found it okay, what’s our problem?

We are talking about pot, and the topic at hand is the legalization of the drug for taxation purposes. Leave it to good old Uncle Sam to find away to collect more taxes. A cynic would say that if you’re going to tax one drug, tax them all. And there are very powerful arguments for decriminalization of almost all drugs. There would be lower costs in imprisoning people, and higher taxes going into the government coffer. There would also be methods to control the content of the drugs, creating cottage industries. But let’s table that for a moment.

To the first time smoker, tobacco has almost the same effect as marijuana. Many closet cigarette smokers only do so when drinking because it “helps” the buzz. Cigarette smoking is an accepted industry because of its history, but also because the marketing machine that is the Tobacco Industry worked very hard in the 40’s and 50’s to criminalize marijuana. If you haven’t seen the film, REEFER MADNESS, you’re missing out on one of the best propaganda promotions in history. Powerful tobacco lobbies criminalized pot, and Americans went along with it. The problem may be education. The voting public today grew up under the “Just Say No.” policy. Again, great marketing campaigns turned the mind of the population. Who can forget “This is your brain on drugs.” It’s a powerful message and no one wants scrambled brains for breakfast.

Psychologists and sociologists shout that pot is a gateway drug that will lead to higher tendencies to move to harder drugs. They also publish reports that state people who smoke cigarettes have a tendency to move to harder drugs, but no one is screaming that tobacco is a gateway drug. Maybe they should.

The anti-marijuana crowd is great with statistics that tell you how bad pot is and what it costs society. Trot those numbers next to alcohol related incidents and you find a difference of almost unbelievable proportions. There are 181,000 pot related traffic accidents each year. There are 1,810,000 alcohol related traffic accidents each year. Yet alcohol is legal.

With the country in the economic turmoil it’s facing now, maybe pot is the answer.

Alcohol was demonized during Prohibition by a group of conservative hard liners who blamed all of society’s problems on it. Sure, why blame yourself or weak character when a scapegoat is so easily found. So hooch went underground and ushered in an era of gangsters, bootleggers and a bigger government to fight the war on booze. (It also led to the creation of NASCAR.) Prohibition put the elements in place that led to a decline in societal values, instead of improving them, as the prohibitionist would have you hope. Marijuana faces these same camps.

On one side you have the anti-drug crowd who blame pot for everything from Al-Queda to overactive teenage sexuality. On the other side you have the pro-pot supporters talking about the benefits of the drug, such as pain management and mood enhancement. Then there are those of us in the middle who recognize that pot is the exact same category as cigarettes and alcohol, and that those two drugs kill more people than pot ever has.

We in the middle hope pot is legalized, regulated and taxed. Not only would it be a big boost in the economic arm of America, but much needed public funds for education and emergency services could be created. As more and more government entities are shuttering their doors due to lack of money, maybe pot is the answer to turning our tax kettle’s black.

So how would we play pot if it gets legalized? Follow the tobacco companies that will plant thousands of acres of the quick growing cash crop, and the mid-level retail giants that will add the shops to their folds. You won’t find the stores in the mall, but maybe strip malls. Internet trade will boom, so bet on any tech platforms that can support it. If Yahoo or another portal gets a jumpstart on the market they can dominate it. EBay would be a definite consideration as the auction site would explode with “How to” and Home grown manuals.

If pot is legalized, you could turn a great play on your portfolio and as America rakes in tax dollars, you could rake in profits.

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Comments (5)

>>Powerful tobacco lobbies criminalized pot, and Americans went along with it. This is at best, inadequate, and at worst completely false. Marijuana was the target of a 'smear' campaign originating with W.R. Hurst, the newspaper magnate. Hurst was deeply invested in forestry holdings and paper mills. His profits from those holdings would be reversed completely into devastating losses if hemp were to replace wood-pulp paper. It was a lengthy and widespread campaign resulting in first state anti-marijuana laws, and eventually a federal law. To date DuPont chemical co. has spent over 8 billion (yes with a 'b') dollars on lobbying the U.S. congress to keep marijuana and hemp cultivation illegal because a large portion of their patent portfolio including the patents for nylon and many plastics as well as the chemical process for rendering wood pulp into paper ready fiber, would be rendered completely worthless were hemp to be allowed to compete with wood fiber on merit alone. Even a cursory overview of this topic would lead a hardcore skeptic to understand that the illegality of that particular plant is purely political and is most definitely NOT for your protection.

typo: William Randolph Hearst (not Hurst)

I have heard the stories that the wood, paper and cotton industries were responsible for the making of marijuana illegal. I am not sure that is true, though I believe it’s true that their lobbying efforts over the last many years have certainly kept it from becoming legal. And it is ridiculous that at least hemp isn’t legal for all of its uses not to mention saving trees. According to the History Channel, pot was outlawed during the depression when Mexican workers came across the border seeking jobs in America, brought with them drugs including marijuana. With alcohol being outlawed many turned to pot for the high. The politicians saw the opportunity to outlaw pot and kick the immigrants out at the same time. This from the History Channel DVD called “Hooked: Illegal Drugs and How They Got That Way”.

Mark Romero

I would like to someday be an investor of the soon to be legal marijuana market in California. Does any one who the pioneering companies of this industry will be???

Great article with insight to the problem.