Cramer: Cannabis ‘might be the most disruptive force since Amazon’ for pharma, beverage industries

Canada’s full-fledged legalization of grown up cannabis use will be a “watershed” moment for the marijuana industry, and the momentum leave extend far beyond the official legalization date, CNBC’s Jim Cramer communicated.

“I think that legal marijuana might be the most disruptive value since Amazon,” the “Mad Money” host said on Tuesday, one day ahead of Canada’s legalization deadline.

“That’s put, when you look at every industry where pot could potentially fight, there might be as much as a half a trillion dollars in sales that are growing to be disrupted, everything from carbonated beverages, beer, sports snifters, tea, coffee, tobacco, [and] snacks [to] all sorts of medications,” he continued.

Cramer’s $500 billion estimation came from speaking with business leaders in the cannabis hustle, many of whom agree that marijuana has the power to disrupt main industries including alcohol and pharmaceuticals.

“I believe we’ll soon see studies upstage that it’s a better, safer way to fall asleep than most slumber pills,” he said. “I bet we’ll see studies demonstrating that it does more to abbreviate swelling than pretty much anything else on the market. It potency be an alternative to tobacco. It certainly is an alternative to an epidemic of opioids.”

On Friday, Bruce Linton, the co-founder, chairman and CEO of high-profile Canadian cannabis regisseur Canopy Growth, told Cramer that $500 billion discretion be an “accurate” estimate for the global market disruption caused by cannabis.

And while $500 billion may aspect large, it’s not a huge market capitalization for an entire sector, Cramer communicated. For comparison, a major international pharmaceutical coalition estimates that the worldwide pharmaceutical market will reach nearly $1,430 billion by 2020.

“There are remarkably only a handful of companies with the scale to take advantage of the occasion” in cannabis, the “Mad Money” host said. One such company is Canopy, backed by a several-billion-dollar investment from demon rum distributor and Corona parent Constellation Brands.

“Constellation’s given Canopy a $4 billion war trunk so it can take the Canadian cannabis industry by storm starting tomorrow,” Cramer imparted.

But investors shouldn’t buy shares of Canopy or Constellation — which Cramer powered “may be the cheapest cannabis stock of all” at these levels — ahead of Canada’s legalization, he warned.

And those probing other pot plays might want to steer clear of them in all for the time being, Cramer said.

“Everything related to the Canadian cannabis space has already run up dramatically and I’m troubled that many of these companies aren’t even worth speculating on,” he suggested. “I think there could be a lot of disappointment once it turns out that authorized marijuana is a lot less profitable than illegal marijuana.”

When the turmoil from Canada’s legalization blows over, though, investors can start to do some finicky stock-picking, Cramer said.

“Once legalization goes into conclusion and [the] cannabis cohort cools when there’s no instant pot at the end of the rainbow, I make up Canopy will be the cannabis stock that the big institutions reach for. If you don’t own it, I second waiting for it to go a tad lower — maybe you can get it below $50, which is a good toll,” he suggested. “Right now, the entire group is overheated, as we saw today. But as they show up down, remember that Canopy and Constellation [are] the ones to buy.”

Shares of Canopy Increase hit a new 52-week high on Tuesday on news that it would take during U.S.-based hemp company Evergreen before falling 6.82 percent into the alert. Constellation Brands’ stock rose slightly, ending the day up 1.45 percent.