High Returns, Higher Risk: Tips On Investing In Marijuana Stocks And Start-ups, In U.S. And Canada

By Sam Wood
The Philadelphia Inquirer

WWR Article Summary (tl;dr) The Wall Street Journal compared 2018’s marijuana frenzy to 1997’s craze over the Internet. So what are some potential ways to invest? Columnist Sam Wood takes a look.

The Philadelphia Inquirer

In the annals of investor euphoria, marijuana will likely mark a high point.

Mirroring last year’s spike in crypto-currencies such as bitcoin, marijuana has emerged as 2018’s hot investment topic, and promises to engage investors from Wall Street to Main Street after Canada legalizes cannabis for adult use on Oct. 17.

The Wall Street Journal compared 2018’s marijuana frenzy to 1997’s craze over the Internet.

While expectations are prodigious, legal cannabis spending globally is expected to hit just $32 billion by 2022, concludes Arcview Group/BDS Analytics.

So the entire worldwide legal market, by that estimate, may reach only the size of 3M or ConocoPhillips.

Analysts with the Cowen Group forecast that legal marijuana will reap $75 billion by 2030.

With public companies’ stocks gyrating up and down, “it’s very important to do due diligence because revenues are more important than the number of press releases,” said Arcview’s John Downs.

For the high-net-worth crowd, opportunities include syndicates, private equity, and venture capital funds.

For mom-and-pop investors, the options may be riskier, given that retail investors can access the marijuana market mostly through volatile Canadian stocks such as Tilray, a Canadian marijuana producer that went public in July at $17 a share. Speculators drove Tilray up to $300 in mid-September before it slumped to $140 or so on Friday. Beware this overhyped weed stock.

The Securities and Exchange Commission also issued a stern alert about marijuana stocks in early September, warning of fraud and market manipulation.

Medical marijuana is now legal in 30 states. Pennsylvania, New Jersey, and Delaware are in the process of expanding their medical programs, and industry experts are gambling that full-adult recreational use could be legalized in the three states within five years. Nine states already have legalized adult-use cannabis.

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