As Daily Cut regulars know, one of the big themes we’re covering is the wave of cannabis legalization. And with good reason…

Speaking after the Mexican Supreme Court ruled that marijuana prohibition was unconstitutional, Mexico’s former president Vicente Fox said:

The “Green Rush,” as it’s been called, will be one of the largest wealth creators of our generation. And as we move out of the shadows, real businesses in this sector will prosper in a way most industries only dream of.

And it’s the same story here in the U.S.

But one sharp-eyed reader reckons there’s a potential hole in the investment thesis for cannabis companies… and Daily Cut editor Chris Lowe responds…

Reader comment: No one seems to be considering the effect that home growers will have on the [cannabis] market. With legalization and over-taxation, home growers will pop up like weeds. Far easier than home-made alcohol or tobacco, even apartment dwellers can drop seeds in a few flower pots and grow their own without fear of the law.

I could easily grow 300 plants in my own backyard for personal consumption and have plenty to share with my friends, family, and neighbors like I do with my tomatoes and peppers. The legal market and black market will both have to compete with that. Eventually, pot will be as free as dandelions.

– Clark R. (Legacy Research member)

Chris’ comment: It’s a great point, Clark. And no doubt some people will choose to grow their own plants. That said, growing marijuana requires a lot of effort and space…

For more on this, we turned to Legacy Research co-founder Doug Casey. Doug spends a lot of his time in Aspen, Colorado, so he’s on the frontlines of this issue. Here’s what he had to say:

I’ve asked myself whether the legalization of pot won’t allow “informal” growers to steal a lot of market share from the legal providers, who will have to deal with taxes, fees, regulations. Probably. But, to make a comparison, legal gambling overwhelms illegal gambling. And the same will be the case here.

Most people won’t want the hassle of dealing with the underground suppliers. Plus, quality and branding are critical with things of this nature.

It’s also important to remember that states have enacted strict regulations on home growing.

Here’s a rundown of Colorado’s “home grow laws”

  • Up to six plants are allowed per Colorado resident over age 21, with as many as three plants flowering at one time.

  • All residences will be limited to a maximum of 12 plants.

  • Marijuana plants must be kept in an enclosed, locked area that can’t be viewed openly. This means the plants can’t be outside.

  • At homes with residents under 21, any marijuana grow area must be enclosed and locked in a separate space that minors can’t access.

  • At homes without residents under 21, extra precautions must be taken to make sure any visiting youth don’t have access to marijuana plants.

  • Homegrown marijuana or marijuana products can’t be sold to anyone. Only licensed grow establishments can sell marijuana products.

You can see that Colorado allows a maximum of just six plants per adult resident, and up to 12 plants per household. You’ll also notice that homegrown marijuana cannot be sold under any circumstances.

It’s the same story in California and the other states that have legalized cannabis. So the dandelions are safe from competition.

Moving on… Here’s a question about a specific category of cryptocurrencies for Teeka Tiwari, world-renowned crypto expert and editor of Palm Beach Confidential

Reader question: I have to thank Teeka and his team for the great crypto advice provided and the benefits from his vast trading knowledge. My question is, why hasn’t he provided any advice about crypto gold tokens/currencies?

Can he please provide some information regarding their pros and cons, and some advice and information about them?

– Rodney T. (Legacy Research member)

Teeka’s answer: Gold-backed crypto coins are an asset I’ve done a tremendous amount of research on. I’ve both researched and advised on several gold-backed crypto coins.

The reason I have not recommended them is twofold. One is a lack of liquidity, and the other is a lack of ease and the high cost in taking delivery of the underlying gold.

I am confident these two problems will be solved. And I know that when I find a solution that I feel confident recommending, I will bring it to my subscribers’ attention.

Teeka isn’t the only Legacy Research expert who’s optimistic about the future of gold-backed cryptos.

Here’s Crisis Investing chief analyst Nick Giambruno with some thoughts about the pros and cons…

Nick’s answer: There will never be a gold-backed crypto that can completely stand in for gold. There is simply no substitute for owning physical gold that you can readily hold in your hand.

However, owning large amounts of physical gold presents its own challenges. It’s hard to store securely, move long distances, and break down into smaller amounts. A gold-backed crypto can help address these drawbacks.

That’s why I view gold-backed cryptos as a complementary tool for individuals all around the world to access sound money.

This should make them appealing to merchants, lenders, businesses, investors, escrow services and the like – anyone who wants to conduct business in gold… but also wants the convenience of cryptocurrencies.

Businesses could use gold-backed cryptos to pay rent, salaries, or other ordinary expenses. The possibilities are enormous. I think that could open a huge new ecosystem.

That’s why I think gold-backed cryptos could create a genuine revolution in finance and why I’m so excited about them in general.

Next up, a Cut reader tells us about her biggest fear… And Bill Bonner Letter coauthor Dan Denning has a less-than-reassuring response…

Reader comment: I am more concerned about a U.S. Surveillance Society than terrorism.

– Lynne C. (Legacy Research member)

Dan’s comment: The world of total surveillance is coming at us faster than you think. I showed you new evidence of that in the Letter we published earlier this week. A new book has just come out covering, in academic detail, many of the themes I’ve been writing to you about for almost two years now. You can read about it here.

Nowhere is this happening as fast as it’s happening in China. A new “debt shaming” app has been launched by officials in the Chinese province of Hebei, according to China Daily. The app shows you the exact location of anyone within 500 meters of you who’s in debt. Why?

The idea is to shame Chinese citizens into reducing their debt. It works on two levels. First, that debt itself is shameful. Second, that debt makes a person socially untrustworthy. Chinese authorities believe that in a nation of 1.5 billion people, technology can help create trust and prevent fraud and corruption. This is the logic behind their Social Credit System. [Daily Cut readers can catch up on China’s system here.]

My point: Whatever they’re doing in China we’ll eventually do here. We already have credit scores. And the internet is turning into one big shame machine. The big difference (up until now) is that individualism, privacy, and liberty are still cultural and political values in the United States. In China, order, security, and stability are cultural and political values. I think we’re becoming more like China every day.

Let’s close today with a big-picture question that has no easy answer…

Reader question: When will this era of the dumbing down of Americans be over?

– Andrea L. (Legacy Research member)

Dan and his mentor, Bill Bonner, dig into societal issues like this in The Bill Bonner Letter and Bill Bonner’s Diary. So we’ll turn back to them for some insight.

First up, Dan…

Dan’s answer: As the great John Mayer once sang, “When you trust your television, what you get is what you got. When they own the information, they can bend it all they want.”

The internet got too dangerous for the Deep State and the mainstream media. Too many independent and alternative ideas. Too many people thinking for themselves. That can’t be allowed.

So the internet has developed into a tool of surveillance and behavior modification, used to track, nudge, and influence what people see, what they think, and what they believe.

The only way to get out of that and reclaim your brain is to walk away and start thinking for yourself.

P.S. Rome was sacked countless times during its decline and fall. That probably smartened people up. As did the guillotine in France.

And the last word goes to Bill. (Warning: if you don’t enjoy sarcasm, stop reading now!)

Bill’s answer: I don no. Meybe wen it gits to the botum.

That’s all for today. But before we go, we’d like to give two of our Legacy Research experts a quick pat on the back.

In September 2018, Jeff Brown recommended U.S. semiconductor company Xilinx (XLNX) to subscribers of The Near Future Report

Three months later, Jason Bodner spotted unusual institutional buying of Xilinx shares and quickly advised his Palm Beach Trader readers to take a position…

Yesterday, Xilinx exploded 18%. Jeff’s readers are up 42% in four months, and Jason’s readers are up 24% in one month.

So kudos to Legacy’s two JBs.

Note: The current run-up pushed Xilinx past Jeff’s and Jason’s buy-up-to prices, so please don’t chase the stock.



James Wells