The Stoner’s Guide to Investing in Pot Stocks
It’s seven months after marijuana’s biggest election, and the momentum just refuses to die down. In the past month, we’ve seen Vermont pass a decriminalization measure, former Microsoft exec Jamen Shively start on his “Starbucks of pot” promise, and even good old puritanical Pennsylvania get its own legalization bill courtesy of Daylin Leach. The tides are continuing to turn, and not just in a social sense — bud is well on its way to becoming big business.
With 18 medical marijuana states plus DC, 15 decriminalized states, and full legalization in Colorado and Washington, rightfully so. In Colorado alone, tax revenue from legal marijuana sales alone is expected to touch some $130 million by next year. Nationwide, the fledgling cannabis industry was worth $1.7 billion in 2011 — a figure that some experts expect to jump to more than $9 billion in fewer than five years. Worldwide, we’re looking at a $30 billion-a-year industry.
Investors, it seems, are burning to get their hands on some of these stocks and hoping for high returns on their initial investments. And who can blame them? Just as the dotcom boom did for the web, the rising tide of marijuana legalization offers investors who are comfortable with risk the opportunity to carve out a good profit from a new frontier not only in pharmaceuticals, but also in recreational use. In the stockbroker vernacular, weed stocks today are “sexy,” meaning, well, the same thing — attractive and dangerous.
However, as Mark Kleiman recently told the Daily Beast, all this obsession over weed stocks has many pocketbooks chasing few opportunities: “Can you say dot-com? Somebody’s going to be Google. A lot of people are going to be Pets.com.”
Kleiman’s assessment could be applied to just about any new industry (hello, 3-D printers), but it’s especially true for cannabis. The federal prohibition of the drug is still on, adding the unique facet of asset seizure to the risk assessment process for weed investors. And, as a new economic niche, many pot companies are traded on the penny-stock side of things, meaning that they’re particularly volatile. That doesn’t, however, make marijuana investment a bad idea — just one that requires careful consideration.
As a millennial, I’m not directly involved in the stock market, and as a result I might not know as much as, say, Gene Marks. I do, though, know a bit about weed, and if I were to start investing in the cannabis industry today, here’s who I’d go with:
Medical Marijuana, Inc. (PINK: MJNA)
Based out of San Diego, Medical Marijuana offers everything from business-management solutions for medical marijuana and hemp companies to cannabis testing and cannabidiol (CBD) chewing gums and other products. MJNA’s portfolio is extremely diverse and forward-looking, even tapping into the European market with its Canipa Holdings brand. Compared to last year, the stock is up 456 percent, which may only reflect the volatility of cannabis stocks generally. In a full recreational legalization scenario, which many expect would cause the market to gyrate wildly, the company’s focus on the almost totally medical CBD component of marijuana should make it a more stable pick.
Rapid Fire Marketing, Inc. (PINK: RFMK)
With hash oil as the up-and-coming form of marijuana concentrates due to its easily concealable but powerful nature, the devices used to consume that particular drug are bound to see a huge jump in popularity. Sure, glass is king, but the new class of vaporizer pens — hailed for their inconspicuous look and efficient operation — is bound to upset the paradigm. RFMK owns the Vapor Inhaler, a base technology for vape pens used in models like the Power Puffer and CANNAcig, and marketed as both a nicotine vape in non-medical areas and a medical device in applicable states. The stock is currently down 50 percent for the year, but with hash oil set to break in to the mainstream, we need only give it time.
Medbox, Inc. (PINK: MDBX)
They say convenience is king, and that probably goes double for patrons of the cannabis industry. Think of Medbox like the Redbox of weed, except way more put-together and high tech. Their distribution boxes utilize biometric fingerprint scanners to dispense medicine to patients in medical states, but considering the rising legalization movement, a Medbox application in a legal state only makes sense. Their stock is somewhat notorious for a rollercoaster period this past November, but overall they’re up an astonishing 766 percent since last year. The $400 million market cap — pretty much the highest around — doesn’t hurt, either.
Imperial Tobacco (UK:IMT)
As much as CBD-based medications are revolutionizing the medical cannabis industry, people will always love a good blunt, and, thankfully, IMT has us covered. Imperial Tobacco owns the Phillies cigar brand, a classic stick to crack open when it’s time to roll up, along with a few rolling paper brands and similar smoking accoutrement companies. Whether we’re talking medical or legal weed, it’s pretty clear to see how BTI would benefit in a pot-friendly market, and in fact has shown fairly consistent growth since the start of the recession in 2008. Call it a way to diversify your portfolio.