The Mooch Makes the Case for Cannabis Investment
It’s been more than two decades since California voters approved what seemed then like a radical proposition: legalized medical marijuana. Today, legal marijuana is widespread -- 33 states have legal medical marijuana, and 10 states (including Washington, D.C.) allow for legal recreational use of marijuana by adults 21 and over.
Cannabis has come a long way from the dark alleys of the prohibition. It is not only viewed as a recreational novelty, but also as an effective way to relieve chronic pain. It’s also a big business. According to Arcview Market Research and BDS Analytics, global spending on legal cannabis is expected to grow 230 percent to $32 billion in 2022, up from $9.5 billion in 2017.
Wall Street is getting wise to the growth potential of cannabis, which is why we are including discussions on the topic at our 10th annual SALT conference, alongside other burgeoning industries like digital assets and financial technology. While some people are wary of investing in a product that is still federally illegal, there are good reasons to give cannabis a second look.
Public acceptance of legal marijuana is increasing. According to results of a 1,000-person survey by the Center for American Progress, in partnership with GBA Strategies, 68 percent of respondents support legalization (including 40 percent who strongly support it), which is the highest positive response rate recorded in recent surveys. What’s more, support for cannabis is broad, with majorities of every demographic -- including gender, race and political preference -- in favor of lifting the ban.
There’s no way to put the genie back in the bottle with all the infrastructure now in place. States are collecting hundreds of millions of dollars in new tax revenue every year. More and more people view marijuana as akin to alcohol or cigarettes. With momentum on the side of legalization, it’s only a matter of time before the federal government lifts its prohibition, effectively putting cannabis investment out of reach for many investors.
Is cannabis investment risky? Investing in any emerging industry will always poses risks, but there are also ways to balance risk with reward. If you’re uncomfortable investing in an over-the-counter exchange -- marijuana stocks aren’t listed on the major exchanges because of federal prohibition -- consider investing in an ETF, which is primarily composed of marijuana stocks listed and sold in Canada, where it’s legal. This is an easy way to diversify your cannabis holdings.
For many, investing is as much an opportunity to express their values as it is an opportunity to make a profit, which is why environmental, social and governance (ESG) investing has become so popular in recent years.
There is growing evidence legalized marijuana brings societal benefits. In states where marijuana is legal, incarceration rates have declined by keeping low-level, non-violent drug offenders out of prisons. Binge drinking and overdose deaths are both down in states with legal marijuana.
Most importantly, marijuana is helping countless patients coping with cancer, HIV, multiple sclerosis, chronic pain, anxiety and depression to live happier and more-productive lives. Columbia Care,a SALT Conference sponsor and one of the country’s largest medical marijuana providers, has found that marijuana is an effective weapon in the war against opioid abuse. As part of a pilot study, Columbia Care collected data on 76 patients and found that 62 percent reduced or stopped using opioids completely after taking medical marijuana. The results were so promising that the National Institute on Drug Abuse (NIDA) funded a $238,000 groundbreaking project -- led by Columbia Care and researchers at Columbia University -- that will follow more than 10,000 medical marijuana patients in New York over the next two years.