By David MacDonald I t’s shaky ground for many investors – which is ironic, because it’s medically proven to temporarily stop many tremors – but their fears are well warranted. There’s a distinct haze around this investment opportunity. It’s legal- ized in Nevada, but illegal on the Vegas Strip. It’s legalized in seven other states (Arizona, California, Colorado, Florida, Maine, Massachusetts and Montana) and prohibited in five (Idaho, South Dakota, Kansas, Indiana and West Virginia). It’s widely available for medical use throughout the United States, but its psychoactive components are often regulat- ed. When it was first sold recreationally in Washington state, prices peaked at $25 USD per gram before settling, after only six months, at $15 USD per gram. Growers and retailers don’t know what President Trump’s stance is (another Pres- ident tried it, but never inhaled). Canada is roughly a year away from nationwide legalization with the Government of Canada predicting a 40 per cent retailer margin, which they will guarantee for the period between 2018 and 2021. That’s in a retail market expected to see annual profits in the range of $5 and $9 CDN billion. By 2020, it’s predicted that annual revenues in the United States will exceed $8 USD billion, with some figures as high as $20 USD billion (and that’s only in the eight states wherein it’s currently legalized). It’s pot, children, what’s that sound, everybody look what’s going down. Well, what’s going down is arguably the biggest investment opportunity in demerit goods in a lifetime, and what’s more encouraging is that all the right people think so too.
If you’re the type of investor who looks to Silicon Valley before looking to the TSX or Wall Street, you’ll like this: According to Forbes, investors in California’s monetary breadbasket are excited. So excited that old and new inves- tors alike are filling conference halls to hear the low- down on something that’s never been on the up-and- up until recently. Their enthusiasm might have something to do with the fact that 40 per cent of the entire American marijuana industry is currently controlled by Californian companies, but it might have more to do with recent surveys conducted in the United States. Eighty per cent of Americans surveyed admitted to occasionally or often substituting alcohol with marijuana, particularly in social settings. (That’s a nice chunk out of the pocket of an industry with an estimated annual worth of $400 USD billion). These numbers aren’t lost on investors in The Great White North. Canadian investors are buying marijuana stocks by the bushel and there’s no getting stopped at the border this time. While it may take some time until Congress moves to the tune of Parliament, it seems all but a certainty that the big banks’ reluctance to invest will be short-lived. Any way you look at it, the yellow tape that’s flapping in the wind around this market now is tantamount to speed signs on a Go-kart course.
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APRIL 2017 • SPOTLIGHT ON BUSINESS MAGAZINE
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