It’s a house just like yours.
Unassuming, paved with red brick, sitting quietly in a good neighbourhood.
You walk past it all the time. Sure, the neighbours aren’t so friendly. In fact, you almost never see anyone come in or out of the house. But who would complain? There’s no barking dog, no screaming children, or any sign of life at all really.
Every so often, cars pull up to the driveway and leave soon after. Perhaps the residents are true recluses, who only like to socialise for five minutes at a time. Or maybe they’re addicted to Uber Eats. Nothing wrong with that.
Come to think of it, they must hate the outdoors too. The blinds are always drawn, and the sound of whirring fluorescent lights and ventilation fans is constant.
But what you wouldn’t have noticed was the mountain of electricity cords nestled inside. Or the overpowering aroma that hits you once you walk in the door.
Because unlike a normal home, these houses are million dollar drug dens hiding in plain sight.
An invented problem
This is the general script we’ve heard spouted over and over again by the likes of A Current Affair and even the ABC.
It’s not news that cannabis ‘green houses’ are proliferating all over Australia. New South Wales and Victoria have been hot beds for illegal growing operations for decades. And with each house having the potential to make over $250,000 in just three months, even the most straight-edge, drug-abstaining citizen can see the appeal.
Yes, Australia’s illegal cannabis trade is worth millions. We’ve known this for a long time. Because, as NSW drug squad commander Peter McErlain confirms, the deterrents don’t seem to be working:
‘The scale of what we’re finding in cannabis grow houses across NSW and potentially across Australia is alarming.’
Since 2011, the south-western Sydney police have raided 570 houses and found over AU$205 million worth of cannabis. And in 2017 alone, Victorian police seized over 33,000 plants from domestic homes.
We can all laugh at the ludicracy of it all. The over-dramatized raids and excessive demonization of ‘criminal’ growers has become almost comical to the Australian public. In fact, the overwhelming response to the ‘exposés’ has been exasperation towards the law itself.
2.1 million Australians reported that they have used cannabis within the last 12 months. A figure which is most likely a gross underestimation of the actual number of casual or heavy users.
The demand is there. And with no legal channel, it’s the perfect environment for illegal activity to thrive. In the most extreme cases, the grow houses are led by organised Vietnamese crime rings. But more often, the ‘hardened criminal’ is your neighbour or a friend-of-a-friend who has their own plant.
The solution is staring law enforcement right in the face. Really, it’s staring us all in the face.
Health Minister Greg Hunt has already stated that he would like Australia to be ‘potentially, the world’s number one medicinal cannabis supplier.’
So why not make Australia a recreational marijuana hub as well?
The solution is becoming almost painfully obvious after nine US states, and now Canada, have taken initiative and legalised recreational marijuana. A decision which has been met with overwhelming optimism by the public, and their economies.
Money that was once tied up in the hands of illegal activity can now be funnelled back into more important things, like schools or infrastructure. And innovative businesses and their investors have been allowed to prosper.
This year, California has recorded $2 billion in cannabis sales. Considering cannabis was only officially legalised on 1 January, that’s an incredible feat. And it’s all thanks to the state’s marijuana businesses which have taken a golden opportunity and run with it.
Take Défoncé Chocolatier for example, a boutique business which produces artisan cannabis infused chocolates. They have successfully managed to take a plant that was once demonised and associated with low-life criminals, and sell it to an upper-class market.
Or MedMen, an upscale Californian company which allows customers to browse through an array of cannabis products, including candy, vape pens and marijuana-infused granola bars.
According to MEdMen’s CEO Adam Bierman, the business’ success is testament to the changing attitude towards marijuana. As he explains,
‘This means expanding the drug’s customer base beyond stoners to “Chardonnay moms” and “nine-to-five dads who previously came home and opened up a bottle or had a shot or took a Xanax.’
Indeed, the way things are going, cannabis is on track to rival both the alcohol and pharmaceutical industries. According to a research report by Cowen & Co, the Californian cannabis industry will be worth $50 billion in 2026, up from $6 billion this year. A rise which will only continue as untapped demographics gradually filter through.
Although Australia is yet to see the light when it comes to recreational cannabis, as an investor there is no reason for you to miss out. When Canada officially legalises cannabis nationwide with their C-45 cannabis bill on 17 October, there’s no telling how grand the investment pay-offs will be. If you’d like to get involved but don’t know where to start, this investment report outlines which stocks have the potential to rocket on the back of this billion dollar cannabis industry. To access it, click here.
This week in Markets & Money
This week, talk of a trade war rattled the markets. Although we have seen low volatility for some time now, the fear index has begun to spiral. Investors are becoming wary and the markets are sitting precariously. And as Selva wrote on Monday, any news, good or bad, could tip them over.
To read more, click here.
Property prices in Australia are trending lower. But when you look around Melbourne or Sydney, that fact is hard to believe. What’s with all the construction? As Selva explained on Tuesday, it’s all to do with the banks…
To read the full story, click here.
You’d be forgiven for missing the RBA’s cash rate decision this week. People have largely stopped paying attention since rates have been left on hold since August 2016. And to no one’s surprise, the RBA decided to keep the rate at 1.50% yesterday. But as Selva wrote on Wednesday, even though the RBA may be keeping rates low, lenders may start increasing them…
To learn more, click here.
Asset prices are soaring and house prices are plummeting. Those who reside in Sydney or Melbourne are truly living in confusing times. And as Selva wrote on Thursday, the only chance of a shakeup would be if the RBA decides to change cash rates.
To see all of the different economic scenarios, click here.
Then on Friday, Selva wrote about the uncertainty and loss that financial crises bring. And how we should always be prepared for the next one to arrive. But in her view, there’s one asset in particular that can guard against any economic misfortune…
To learn more, click here.
Until next week,
Editor, Markets & Money