Attention Pot Smokers: This Fast-Food Giant Has a Meal Deal for You
Marijuana might be illegal at the federal level in the United States, but it's nonetheless among the fastest-growing industries in the country. According to Marijuana Business Daily's latest report, "Marijuana Business Factbook 2017," the U.S. legal weed industry is expected to see sales grow by approximately 45% in 2018. Between 2016 and 2021, aggregate sales growth for legal pot should quadruple to about $17 billion. This sales growth is a big reason why investors have jumped into marijuana stocks despite the risks of the drug remaining federally illegal.
Another critical catalyst has been the steady shift in the way the American public views marijuana. What was once a taboo topic that few discussed is now a topic that can be covered at the dinner table, as well as by politicians on the campaign trail. According to national pollster Gallup, 64% of respondents in its Oct. 2017 survey favored the idea of legalizing marijuana in the United States, which compares to just 25% who felt the same way in 1995, the year before California became the first state to legalize medical cannabis for compassionate-use patients.
Image source: Jack in the Box.
This fast-food giant just made a direct play for cannabis users in California
A steady improvement in favorability toward weed, as well as sales growth, has marijuana growers and retailers performing exceptionally well. However, the benefits of state-level expansion aren't limited just to marijuana companies. Other industries could benefit from the green rush as a result.
For example, with recreational-marijuana sales kicking off in select licensed dispensaries on Jan. 1 in California, fast-food giant Jack in the Box (NASDAQ: JACK) announced a partnership with cannabis-focused digital-media company Merry Jane, which is backed by rap mogul Snoop Dogg, an active weed enthusiast, to offer weed-themed meals geared at pot smokers in select locations.
According to a company press release, three locations in Long Beach, California will be testing "Jack's Munchie Meals" between Jan. 18 and Jan. 25. The meals, which will include two tacos, five mini churros, three chicken strips, a box filled half with curly fries and half with onion rings, and a drink, are naturally being priced at $4.20 (a code term referring to cannabis consumption) to really drive home Jack in the Box's attempt to court marijuana-using customers. Scott Chung, chief operating officer of Merry Jane, had this to say:
"Launching the Merry Munchie Meal is the perfect way for both companies to celebrate legalization in our shared home state of California. Merry Jane is the industry leader bridging mainstream brands and legal cannabis culture."
Image source: McDonald's.
Other companies/industries stand to benefit from state-level expansion
Don't think for a moment that Jack in the Box is the only company getting in on the action. Even though McDonald's (NYSE: MCD) hasn't made any direct plays for pot users with regard to specialized meals, it has a clear advantage over Jack in the Box and nearly every other fast-casual restaurant chain, based on its sheer number of locations.
According to a recently released analysis from Green Market Report and Consumer Research Around Cannabis, which examined the responses of more than 27,500 online surveys, McDonald's was hands down the most popular destination of marijuana users over the four-week period of its study. In every single city studied, McDonald's ranked No. 1 by a mile, with 43.4% of pot users as a whole visiting the Golden Arches during the four-week study. By comparison, Yum Brands' Taco Bell came in second with just 18.3% of cannabis users visiting over the four-week period in question. For those curious, Jack in the Box came in ninth, behind Chick-Fil-A and ahead of Carl's Jr.
Even more interesting than the mere distribution of where pot users go when they get the munchies is the fact that cannabis users visit fast-food restaurants far more frequently than non-cannabis users, according to the data. Therefore, McDonald's strength in numbers, and Jack in the Box's meal-deal ploy targeted at pot smokers, would appear to make a lot of sense.
Beyond restaurants, the tourism industry may stand to benefit. Everything from theme parks to hotels could see a modest bump in interest when California joins a handful of other states in selling adult-use marijuana.
Image source: Getty Images.
The pressing question for 2018
Of course, these efforts to appeal to the tastes of cannabis users could all be for naught if Attorney General Jeff Sessions gets his way in 2018. Perhaps the biggest question mark for the industry is what'll happen with longer-term federal budget discussions.
You see, each and every year, Congress has to reapprove the Rohrabacher-Blumenauer Amendment (previously known as Rohrabacher-Farr), which is the amendment that disallows the Justice Department from using federal dollars to prosecute marijuana companies operating in states that have chosen to legalize in some capacity. In September, the House Rules Committee blocked a vote on inclusion of this Amendment, signifying the gap in support for pot's expansion between conservative members of the Republican Party and Democrats. This doesn't mean the Amendment will necessarily be left out of future budget discussions, but it does eliminate one pathway of extending these protections to the pot industry.
In May 2017, Sessions sent a letter to a handful of his congressional colleagues asking for this Amendment to be repealed. Doing so would give him the authority to strictly enforce federal law, which states that marijuana is wholly illegal, and shut down medical and recreational cannabis facilities. Sessions has made his intentions and feelings about the marijuana industry crystal clear.
Will Sessions have his opportunity to trample states' rights in 2018? If Congress chooses to protect pot companies by once again approving the Rohrabacher-Blumenauer Amendment, then these aforementioned adjacent businesses should benefit nicely. If not, one of the fastest-growing industries in the country could go up in smoke.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
