Peaking Interests in Pot Stocks
As reported on earlier, both here and just about anywhere else, the Election Day wins for marijuana legalization claimed new territories with initiatives in Alaska, Oregon, and Washington, D.C. that apparently are creating a spiked interest from potential financial investors who are wondering how much money to devote in the cannabis industry in order to capitalize on the growing change. But some wonder will the payout be worth the risk?
Stocks for Pot
Over an estimated 200 high net worth investors congregated on Tuesday, November 11th in Las Vegas in order to submit pitches to a forum by the ArcView Investor Network. The ArcView Investor Network brings a forum for legal cannabis-related businesses to meet with investors seeking to profit from this growing sector that many believe will be a huge piece of rejuvenating the economy. But despite all the excitement, is now truly the right time to put funds into marijuana businesses?
Some say yes, others say no, but according to a cross-section of media and investment observers, the answer is… well, a little bit of both. Forbes contributor Mark Fidelman recently helped conduct a survey of investors to BioTech to measure the average collective interest in pumping money into the cannabis industry to turn a profit, and found that nearly 75% of the respondents believe that it’s a financially sound idea.
Fidelman himself is quick to acknowledge what could be the single biggest obstacle facing potential investors, that so far marijuana is only legal for sale by in-state companies, and remains a Schedule I substance, making it a little bit more risky business. However, Fidelman and the investors he surveyed believe that it is only a matter of time before marijuana is made legal at the federal level, eliminating the potential to waste money on a company that will be put out of business before it can clear even.
Market Expert Opinions
Anyone who is willing to get involved at this stage of the game with the cannabis industry is probably trying to step into an older pair of shoes and follow in the footsteps of Joseph Kennedy of the old days when alcohol was the topic of economic speculation. CEO of Mentor Capital, Inc. Chet Billingsley explained,
“He amassed a stock position before the lifting of prohibition and made a fortune from the re-legalization of alcohol. Many public companies are copying this model. They are positioning to have market share and established market presences when marijuana prohibition lifts.”
Matt Egan at CNN’s Money desk takes a little bit of a different perspective on the pot market and how he believes investments may be jumping the gun. Publicly-traded marijuana companies are fueled by penny stocks, which are less regulated and more speculative than large cap stocks maintained by major companies. Egan referred to the example of Medbox, which makes automated dispensing systems for both medication and marijuana. That innovation has seen its share of dramatic changes in market worth.
Quite a few over-zealous investors interested in Medbox sent stocks up from $8 in December 2013 to $93.50 less than a month later. Then before you knew it, within two days to be exact, the stock plunged back to $33, and currently remains around $11, not much further from where it began a year ago. Medbox is still one of the biggest marijuana stocks to look at, with a market value of around $350 million, but still it remains a serious risk because the industry itself is still so limited.
Egan quotes Nicholas Colas, chief market strategist at ConvergeEx in an attempt to inspire all the potential investors who are putting all their money on the legalization of marijuana to bring them great riches:
“If you begin to get a feeling that marijuana will become legal in our lives at a federal level, you should probably look at tobacco companies, because they already have the manufacturing and distribution facilities.”
In reality this is probably one of the smartest move that can be made, especially for bigger investors. With the tobacco industry having all the resources to really start making some changes in the way marijuana is grown, harvested, packaged and distributed there is a serious likelihood that if legalized on a national level, they will be creating more jobs for a whole new take on their own industry. Either way planning to put your money where the marijuana is might need a little more strategy than previously expected, but with this kind of change in pot politics, there is sure to be a profit to be made.
Marijuana continues to become more of a topic of discussion as legislation and regulations shift toward legalization. Some are concerned with what impact this will have on those already struggling with drugs or alcohol. How it will effect those who have yet to use drugs or alcohol, and will it create more addicts? Time will tell, but for those already struggling there is help. If you or someone you love is struggling with substance abuse or addiction, please call toll-free 1-800-951-6135