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Investing in Mary Jane
Old 10-16-2021, 11:59 PM   #1
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Investing in Mary Jane

I'm curious what people think about investing in marijuana stocks and ETFs.

Earlier this year I bout some POTX, an ETF. It is down about 50%. But I did not buy a lot so that is much less than $1000. I viewed it as completely speculative.

But, I am pretty confident that marijuana will be legal nationwide in the relatively near future. I have not used the stuff since a handful of times in college over 3 decades ago. But I know plenty of people who do. I don't think I have ever met anyone who does not use it only because it is illegal.

So I do not think legalization will lead to a dramtic increase in sales and use so I am not quite sure that the companies operating in the space will see a big boost to sales.

But what I do expect is that the sudden legality, access to the banking system, capital markets, shipping and transportation infrastructure, and so forth will be a HUGE positive for marijuana companies. So my investment is mostly a bet on that.

As I said, I am down about 50%. I am thinking of doubling, tripling, or quadupling down. In the scheme of things it will not be a lot of money but I think there is a great deal of potential.

Am I crazy?
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Old 10-17-2021, 02:48 AM   #2
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It's hard to know how much federal legalization has been factored into the price of weed stocks. It doesn't seem to be imminent, but does seem to be inevitable. Stock prices could get a nice bump when federal legalization happens, but I think it would be temporary and there's a long way to go before equities are anything but speculative.

People seem to believe that recreational marijuana can be grown like crops in the field. I don't believe that's the case, it is highly labor intensive, and I believe weed companies will be more like organic growers than massive factory farms and growers will remain relatively small players for a long time. I think the big play would be on the retail side, but that too could take a long time as states decide how they want to regulate retail operations locally. It would be interesting to see the first growers co-ops start to form.

One of the more interesting outcomes is that a lot of people who have left their dead end jobs in the retail and restaurant industries have found new work in the marijuana industry. It seems to be a very low stress environment where people are treated more humanely, and don't hate going to work.
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Old 10-17-2021, 06:53 AM   #3
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I wish I had all the money back I "invested" in MJ....
It seems to have just went up in smoke... LOL
A neighbor and friend got his license and started growing Hemp and CBD.
He already has Orchards and farm equipment so start up wasn't to bad..
seems to be doing OK with it.
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Old 10-17-2021, 07:10 AM   #4
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My thought is that once it is fully legal at the federal level, and the banking aspects are a non-issue (which I think is probably still 10 years away), then it will be quickly gobbled up by the big pharma cos. So all these little start ups will be bought out, or shut out. No way to know which you're getting if you invest now.

For example, in the near term, if you have a state that is medical-only, there's a whole infrastructure of doctors and licensing and "pharmacies" - if the state goes recreational-legal then all that goes away, and you pivot to direct retail. If you invested in the part that can't pivot, you're SOL.

Perhaps eventually it will be big/generic, and then you'll have boutique specialty level stuff? But it's all too soon to tell for me to pony up.
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Old 10-17-2021, 07:42 AM   #5
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Played Tilray in the spring and made some fast money. While I truly believe the plant is a great benefit I'm not sure I know how to make money on it.

As far as banking, every dispensary offers ATMs in the lobby and a debit card reader for check out. While opening up the banking industry more will be beneficial don't think the cannibis industry is waiting for regulator approval.
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Old 10-17-2021, 08:08 AM   #6
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SecondAttempt.... No, I don't think you're crazy for taking a small speculative position in the pot market. I did the same about a year and a half ago with YOLO and MJ. Up a little so far. I think (hope) long term it will do well.
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Old 10-17-2021, 09:03 AM   #7
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The high tax rates the governments are levying for the privilege of legalization will/are tending to limit profits. Cannabis may not be the quick windfall investors are anticipating. For example, in Colorado; Retail marijuana is subject to a 15 percent sales tax, levied on retail sales, and a 15 percent excise tax, levied on the first transfer of marijuana from a wholesaler to a processor or retailer. Also potential for additional local taxes.
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Old 10-17-2021, 09:04 AM   #8
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Quote:
Originally Posted by Aerides View Post
My thought is that once it is fully legal at the federal level, and the banking aspects are a non-issue (which I think is probably still 10 years away), then it will be quickly gobbled up by the big pharma cos. So all these little start ups will be bought out, or shut out. No way to know which you're getting if you invest now.

Or Big Tobacco. I once owned Philip Morris for a year in the 1990s when I was learning and doing the Dogs of the Dow strategy. I felt bad owning it. On the other hand, Iím an index fund investor, so I still own that stuff.
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Old 10-17-2021, 09:21 AM   #9
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I held MJ for a year or so. I lost 50% and bailed out. Not a significant amount. It seems to me that the retail business is very lucrative but I never figured out how to just invest in that segment. The farther upstream you go the more risk is involved especially wrt variation in local laws from state to state.
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Old 10-17-2021, 09:30 AM   #10
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It's hard to tell which stocks will be winners. Motley Fool advisor used to tease the best pot stock, up 10,000 percent or somesuch. I do not subscribe but through stockgumshoe.com the stock was identified as Shopify. So more of a picks and shovels type play.

I bought it and it has been a huge winner for me.

There is also a REIT which owns facilities for medical marijuana, Innovative Industrial Properties (IIPR). Scott's Miracle Grow (SMG) and Grow generation (GRWG), a hydroponics supplier, have been suggested as three types of plays.

I only own SHOP and have not fully researched the other ideas.

And I don't use, I just invest.
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Old 10-17-2021, 10:18 AM   #11
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Earlier this year I decided to put some play money into solar, green energy, and marijuana.

The $11K that I put into Tilray, Spinnaker, and Canopy Growth is currently down to less than $2.5K. The solar and green energy aren't fairing much better.

To be honest my logic was to put a little bit of money into these sectors in case one or more of them blew up over the course of the next 10 to 15 years. Otherwise, I really don't pay much attention to them.
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Old 10-17-2021, 11:51 AM   #12
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I believe that the people who got in early and then got out are the ones who made money.

The industry is still shaking out IMHO. No idea where it will go or indeed who the survivors will be and what their financial and capital performance will be.
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Old 10-17-2021, 12:18 PM   #13
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Curaleaf (CURLF) has been drifting down from 16 to 10.5, came out at 7ish.

Headquartered in Wakefield, Massachusetts, Curaleaf has a presence in 23 states, owns and operates 109 dispensaries, 23 cultivation sites, and 30 processing sites with a focus on highly populated, limited license states, including Arizona, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania.
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Old 10-17-2021, 01:13 PM   #14
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Quote:
Originally Posted by Starsky View Post
It doesn't seem to be imminent, but does seem to be inevitable.
That summarizes my view.
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Old 10-17-2021, 04:36 PM   #15
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Some other ways to get lower risk exposure to cannibis:

Altria (MO) has a minority investment in Cronos. And it is doing more to prep for legalization. Cheap stock.

Constellation Brands (STZ) has an investment in Canopy Growth. And it has nice prospects in its own right.
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Old 10-17-2021, 07:16 PM   #16
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Originally Posted by jim584672 View Post
Curaleaf (CURLF) has been drifting down from 16 to 10.5, came out at 7ish.

Headquartered in Wakefield, Massachusetts, Curaleaf has a presence in 23 states, owns and operates 109 dispensaries, 23 cultivation sites, and 30 processing sites with a focus on highly populated, limited license states, including Arizona, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania.
been buying a few shares. The sales growth has been impressive.
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Old 10-17-2021, 07:19 PM   #17
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To me investing in mj would be like investing in alcohol and tobacco.

Yes, there is a growth period coming for wacky tobacky, but the gov't is or will be in on it.
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Old 10-19-2021, 08:31 AM   #18
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Perhaps more money to be made servicing the MJ business than actually investing directly. I have money in Pelorus.

They lend to MJ businesses that have difficulty obtaining more conventional financing. Target yield is 15% but they have been beating that.

Probably a limited time opportunity that will diminish when Federal law changes.
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