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Why Pot Regulation is Good for Our Stocks

The pot numbers coming out of the country’s biggest legal jurisdictions might actually be drastically underreported, according to the latest data coming out this week.

And that could unlock a huge increase in revenues for legal cannabis companies in the months ahead…

After Prohibition ended in 1933, the market for bathtub gin and rotgut all but dried up.

What Does This Mean for Illegal and Legal Pot?

Folks who’d previously resorted to drinking alcohol of questionable provenance had their pick of high-quality beer, wine and spirits.

The sketchy hooch being consumed during Prohibition wasn’t just a taste issue — it was also a huge safety concern, as an estimated 10,000 Americans died from tainted alcohol during the Prohibition period.

As the long prohibition against pot gets lifted in states across the country, a very unexpected challenge to legitimate cannabis is becoming a major problem: black-market retail weed dealers.

Take California, the biggest market for legal cannabis. Not ready to give up their cash cow, illegal weed dealers have taken to opening up retail stores and selling weed right alongside legally licensed dispensaries.

Yesterday, the United Cannabis Business Association (UCBA) released the results of an audit it conducted in California, which found nearly 3,000 illegal dispensaries and pot delivery services operating in the Golden State.

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These black-market stores sell cannabis at much lower prices, since they don’t have to pay pesky costs like taxes or licensing fees. Plus, they don’t buy from legitimate suppliers.

Another report forecasts California’s legal pot sales will hit $3.7 billion this year — versus about $8.7 billion spent on unregulated cannabis products.

Why We Need the Feds to Step In

Clearly, this is a huge problem, and it’s made worse by California’s almost complete lack of enforcement. So far this year, the state has served 19 search warrants at illegal dispensaries…

Just 2,835 to go, according to the UCBA audit.

It’s a daunting job. Right now, an estimated 60% of dispensaries in Los Angeles are illegal.

And it’s not just California. Some experts put numbers in other states even higher!

But while the black market for cannabis is a huge problem that needs to be resolved without delay, it’s also helping to mask the real scale of the profit opportunity for legal operators.

If legal markets are actually three–seven times bigger than they’re currently being reported, the size of the opportunity is immense.

Mounting pressure on law enforcement to rein in black-market pot shops should help increase closures in the months ahead.

And as states realize just how much tax revenue they’re missing out on because of these illegal dispensaries and grow operations, expect them to take the problem much more seriously.

Federal legalization is another huge element that could lead to moving these illicit sales over to legal channels…

Uncle Sam doesn’t mess around with tax collection, after all. There’s a reason it was the IRS that took down Al Capone.

Right now, if you distill alcohol illegally, you risk a visit from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) or the Alcohol and Tobacco Tax and Trade Bureau (TTB) — plus a slew of federal felonies and massive fines. All in addition to state enforcement.

The ball continues to move down the field toward federal legalization of cannabis. And when it does, an army of federal agents is going to have to put the hurt on illegal weed businesses.

In the process, we’ll likely see that this market opportunity is dramatically bigger than the current numbers shown.

Stay tuned.

For Technology Profits Daily,

Ray Blanco
Chief Technology Expert, Technology Profits Daily

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Ray Blanco

Ray Blanco is the editor of Technology Profits Confidential as well as Breakthrough Technology Alert, Ray Blanco’s FDA Trader, Penny Pot Profits,
Ray Blanco's Pot Stock Mastermind, and Technology Profits Daily. Ray has been with Seven Figure Publishing since 2010. In 2018, his closed positions in Technology...

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