Nevada’s recreational marijuana market opened on Saturday and there were several reports of long-lines at dispensaries as residents and tourists took advantage of this new market.
The Las Vegas review Journal recently said that they expect Nevada’s recreational marijuana market to to generate more than $70 million in tax revenue over the first two years.
We would not be surprised if these numbers proved to be conservative as we expect to see much higher numbers reported by the state. The Nevada marijuana market will be fueled by the 40+ million visitors who come to Sin City every year and we think these numbers underestimate the amount of money that will be spent on marijuana.
We are not the only ones excited about the new opportunities created by this burgeoning market and believe that investors can do well by investing wisely in Nevada-based marijuana firms.
Nevada’s recreational marijuana market will see incremental growth over the coming years and the companies levered to it should see significant top- and bottom line.
While there are a lot of companies focused on the Nevada marijuana market, investors need to be selective. Prior to investing, through due diligence must be conducted and investors should focus on companies that have a proven track record of success, a licensed facility to sell recreational and medical marijuana, and enough capital to support growth initiatives.
One of the most profitable sectors of the marijuana markets has been extracts and concentrates. We would look for companies that are vertically integrated, sell a wide variety of marijuana products (flower, concentrates, and edibles).
We also suggest looking for companies that have are constantly looking at new ways to stand out and differentiate from their competitors. Although we are still in the early innings of this growth opportunity, companies that are able to develop a brand that resonates with consumers will be best positioned for long-term growth.
The surge of marijuana products and product types will make branding very important over time and will lead to significant growth over the long-term. This is something investors need to look into when analyzing a company.
Authored by: Jason Spatafora