Caffeine is one of the few proven performance-enhancing drugs.
It can increase your athletic performance, help you concentrate, keep you awake and increase your general wellbeing.
It also makes painkillers work faster, burns fat, can enhance your memory and even reduce your risk of cancer.
It’s no wonder caffeine is put into everything, from sports drinks to food and medicine.
It’s in a lot more than just coffee. But without coffee, we would never have discovered caffeine. Coffee is also the main way that most people get their caffeine. Well, that and energy drinks.
The market for coffee alone was worth over $100 billion back in 2011. I can’t find any exact figures of its worth today, but you can bet it’s even bigger.
The market for energy drinks, which have caffeine as their key ingredient, was worth $40 billion back in 2013. And again, I can’t imagine demand has dropped.
So that’s over $140 billion, before we even get into the medical market.
Caffeine is big business. But let’s not forget that caffeine is a drug. If the powers that be wanted, they could make it illegal. They could put controls on its consumption and restrict its use in medicine.
Of course, they would never do this. Why would they outlaw something as beneficial and harmless as coffee?
But let’s, for a moment, imagine they did.
Imagine it was outlawed for about 70 years or so.
Throughout those 70 years, people would still drink coffee, just illegally and in private. They would launch campaigns to relegalise it, but to no avail. Coffee drinking would become an underground counterculture.
Then imagine that certain companies were slowly granted permission to start growing coffee for use in medicine and medical research.
Imagine their research proved caffeine’s medical uses.
Now imagine that just as the powers that be had decided to ban coffee, after 70 years, they decided to unban it.
In fact, imagine they chose to let the people decide whether it should be illegal or not.
And imagine the people decided that coffee should once again be legal.
Now, what do you think would happen to the stock prices of those companies which were already set up to grow and produce coffee? The ones which had been supplying the medical trial.
Clearly their worth would explode.
They would be the only ones around with the infrastructure and the expertise and trust to supply the world with coffee. At least at first.
After all, the demand would already be there, from medicine and coffee drinkers alike. Once the legal problem was solved, production could and would ramp up.
Imagine if you could be one of the first to invest in those companies. That could end up being a very profitable investment.
I’m guessing that by now, you’ve realised I’m not really talking about coffee here. But the analogy fits, almost perfectly.
I’m talking about a “drug”, with proven medical benefits and huge recreational demand, which was outlawed for years, and is now being legalised.
(And the list of proven medical benefits is no joke. It is phenomenal. You can see just a few of them here, if you’re interested.)
This exact situation is playing out right now with cannabis
If you’re not familiar with the story of cannabis, and why it was made illegal, you’re in for a surprise.
It was not made illegal because of its potential harm, or because it wasn’t useful in medicine (it was). But because the US administration at the time wanted a way to persecute Mexicans.
I’ll let drugpolicy.org explain (emphasis mine):
To understand how we ended up here, it is important to go back to what was happening in the United States in the early 1900’s just after the Mexican Revolution. At this time we saw an influx of immigration from Mexico into states like Texas and Louisiana. Not surprising, these new Americans brought with them their native language, culture and customs. One of these customs was the use of cannabis as a medicine and relaxant.
Mexican immigrants referred to this plant as “marihuana”. While Americans were very familiar with “cannabis” because it was present in almost all tinctures and medicines available at the time, the word “marihuana” was a foreign term. So, when the media began to play on the fears that the public had about these new citizens by falsely spreading claims about the “disruptive Mexicans” with their dangerous native behaviors including marihuana use, the rest of the nation did not know that this “marihuana” was a plant they already had in their medicine cabinets.
The demonization of the cannabis plant was an extension of the demonization of the Mexican immigrants. In an effort to control and keep tabs on these new citizens, El Paso, TX borrowed a play from San Francisco’s playbook, which had outlawed opium decades earlier in an effort to control Chinese immigrants. The idea was to have an excuse to search, detain and deport Mexican immigrants.
That excuse became marijuana.
This method of controlling people by controlling their customs was quite successful, so much so that it became a national strategy for keeping certain populations under the watch and control of the government.
During hearings on marijuana law in the 1930’s, claims were made about marijuana’s ability to cause men of color to become violent and solicit sex from white women. This imagery became the backdrop for the Marijuana Tax Act of 1937 which effectively banned its use and sales.
While the Act was ruled unconstitutional years later, it was replaced with the Controlled Substances Act in the 1970’s which established Schedules for ranking substances according to their dangerousness and potential for addiction. Cannabis was placed in the most restrictive category, Schedule I, supposedly as a place holder while then President Nixon commissioned a report to give a final recommendation.
The Schafer Commission, as it was called, declared that marijuana should not be in Schedule I and even doubted its designation as an illicit substance. However, Nixon discounted the recommendations of the commission, and marijuana remains a Schedule I substance.
At least it used to be. But all that has started to change.
My friend Sam Volkering has been following the cannabis story closely, and he has discovered the equivalent of that coffee company with the massive first-mover advantage in my analogy.
But that’s not all he’s discovered. What Sam has found, he describes as “significant as crypto and the blockchain. The gains coming out of the market look too crazy to be real…”
He’s so excited about this investment opportunity he’s recording a special broadcast with Nick O’Connor later this week. I’ll let you know when, so keep an eye out. This is one not to miss.
How do you feel about countries’ moves to legalise cannabis? Would you be okay taking a drug derived from cannabis, if it was proven to work better than the competition? Let me know: firstname.lastname@example.org.
Until next time,
Editor, Exponential Investor
PS It may surprise you to know that the UK is the world’s largest producer of legal cannabis. In 2016 we accounted for 44.6% of the entire world’s production. You can see the stats in this report from incb.org, starting on page 43.