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Marijuana may make its users relaxed and sluggish, but it will be a booming high time for one of Berkshire Hathaway’s companies.
Based in New Berlin, Wisconsin, Cubic Designs builds prefabricated custom mezzanine systems, standard steel platforms, pipe racks and canopies that add space to facilities.
It’s the kind of space that is needed for marijuana growing operations.
With California, Nevada, Arizona, Massachusetts and Maine all having just legalized the growing and sale of pot within their borders, Berkshire Hathaway’s Cubic Designs, a unit of MiTek, now has plenty of opportunities to market its wide variety of special platforms that maximize floor space in warehouses.
In addition, Arkansas, Florida, Montana, and North Dakota all just legalized the medical use of marijuana, which means that growing and distribution operations will begin in those states, as well.
For Cubic Designs, the marketing plan is ready and tested. When marijuana was legalized in Colorado, the company mailed fliers to marijuana dispensaries touting that they could double their growing space and improve their profits using Cubic Designs’ systems.
With the U.S. Cannabis Spot Index price currently at $1,393 per pound, as of November 4, 2016, maximizing growing and storage space can make millions of dollars of difference for a grower.
The New Gold Rush
Unlike most commodities that get grown in one region and shipped for sale in another, there is inherent duplication within the marijuana industry that benefits equipment suppliers. With marijuana still illegal on the Federal level, the harvested plants can’t cross interstate lines, so all the growing, processing and distribution operations need to be established separately in each state. These redundant operations offer business opportunities for establishing every phase of the infrastructure needed to support.
Much like the California Gold Rush in 1849 made big money for people supplying the panning equipment, this new “Marijuana Gold Rush” means lots of money to be made for equipment suppliers for growers and retailers.
With twenty-five percent of the U.S. population suddenly having access to legal marijuana, the growth opportunities for Cubic Designs will have a lot of upside ahead of it.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.