The IRS is dealing with a problem. A certain group of companies are sending it millions of dollars…
Obviously, pulling in untold millions isn’t the IRS’s problem; that’s what it does. The issue is that these companies are sending in their millions in cold hard cash.
Bones, Clams, Benjamins, Smackers, Simoleons…
Whatever you call them, these greenbacks are coming and coming fast.
The money is coming in so fast, in fact, and in such high amounts that the IRS even had to expand its cash counting resources just to keep up with it.
So who are these folks raking in millions of dollars in cash at warp speed?
Mobsters? Cartels? Casinos?
Nope.
Medical and recreational marijuana companies brought in close to $7 billion last year. That’s billion with a “B”.
But because of the federal laws against marijuana, companies operating legally in places like Colorado and Washington conduct their businesses almost entirely in cash. That means at the end of a good day of work, the companies are sitting on tens of thousands of dollars in cash.
These companies are stuck with it because federal law prohibits banks from taking or processing marijuana money — even if it’s legal in the state the company operates. This is a logistical nightmare…
Steve DeAngelo runs Harborside Health — a medical marijuana company in California. It brought in around $44 million last year. They have to count and deliver their state and federal taxes by hand.
“There are thousands of cannabis businesses in the United States now, and all of them are carrying around tens or hundreds of thousands of dollars in cash,” DeAngelo said. “If something isn’t done to change the situation, it’s, in my opinion, just a matter of time before we see a tragedy.”
We’ve already seen some: over 200 burglaries have occurred in Denver alone since Colorado went legal, according to the Denver police department.
While it may be a pain to sit around counting all your money (I can think of worse problems to have), the major issue for fledgling cannabis companies is access to bank capital. It costs a fortune to build out factories, pay off licenses and hire knowledgeable staff.
But I have found a company that could revolutionize the way cannabis companies operate…
As you can see, it’s hard enough to simply operate a legal marijuana company. It is even more difficult to grow a successful company.
It sounds crazy at this point, considering that legal marijuana could become an $11 billion market within a few years — and is estimated to reach $22 billion by 2020. But the truth is big banks still won’t touch it. If you are trying to grow a business you won’t have the luxury of Bank of America or Goldman Sachs throwing money at you.
If you want to expand your operations — like breaking ground on a new processing facility — it takes a lot of money. Unless a company has an owner with very deep pockets, or a valuable Rolodex of investor friends to call, it can be very, very difficult to come up with capital.
That’s why the company I’m about to recommend today is such a game-changer. It specializes in the “streaming model”…
To put it simply, “streaming” is providing capital to a company in return for the ability to buy the goods at the cost of production plus a small percentage.
This streaming model has been applied with great success to precious metals companies. Barrick Gold (NYSE: ABX) and Goldcorp (NASDAQ: GG) are two mining companies that do business with silver streamers. Silver Wheaton Corporation (NASDAQ: SLW) is the world’s largest silver streaming company.
Here are the benefits…
1) Diversification — A streaming company has deals with multiple miners, which spreads around the risk.
2) Upside Potential — these streaming deals typically pull in a percentage of the mine’s production for life. So if a company discovers new areas or increases production, the streaming company gets bigger and bigger checks.
3) Limited Risk — While the mining company could see profit margins squeezed as the cost of production rises, streaming companies typically have a contract in place for a percentage of the gold/silver production, thus protecting them from rising costs.
This type of model will be huge for the cannabis industry. Unlike miners, cannabis companies have a product that is predictable and coveted. You don’t have to wait for them to find gold or silver — they already have the cash crop ready to roll.
I’ve discovered one company that’s about to break into this business model in a very big way. In fact it just launched today.
Readers of my Marijuana Manifesto newsletter are going to be among the first investors to partake in financing and investing in this company. You can join us right here.
I wouldn’t wait another day. These opportunities only come along once in a blue moon.
If all goes well, you’ll be the next one with a million dollars in a duffel bag…
