Greening out on weed stocks
|Mar 12, 2018|
This week is about weed stocks, cause that is basically the smoking hot thing on the stock market and every Wall Street dork (and also me) is obsessed with "green rush" puns.
Obviously legalization changes in recent years — Colorado legalized it for recreational use back in 2014, Nevada in mid 2017 and California from Jan 1 this year — have meant huge growth for marijuana companies. Now there are eight states, plus DC, where recreational weed is legal, and 21 states allow medical marijuana use. Also, being stoned is fun.
Except nearly every public company involved in marijuana growing or distribution is on the Canadian stock exchange — not on the US markets. The largest three marijuana stocks in Canada jumped 200% last year, but everyone is also freaking out that it's a very volatile industry, with lots of new start-ups and that the green bubble might burst. I get all this, but I still think it's only at the start of the industry and therefore, lots of room for me to still become Nancy Botwin.
In the US, laws are all over the place (even if state laws say weed is legal, national laws are confusing and contradictory) and marijuana companies with US assets could technically have their assets seized by federal authorities.
The current attorney general Jeff Sessions is also known for being super anti-weed, and just last week when quizzed about the opioid crisis said: "We think a lot of this is starting with marijuana," despite evidence showing marijuana use may decrease the chance of opioid use.
So most companies, even US ones, have chosen to float on Canadian stock exchanges.
This is where it gets messy. You can't just buy international markets on Robinhood or Ally Invest or however you normally buy stocks. From the research I've done it is POSSIBLE for people not in Canada to buy stocks on the Toronto Stock Exchange, if you go through a broker, but the minimum I've seen it cost per transaction is about $30.
So it's a bit confusing and expensive BUT doable. I plan on buying some on the Canadian market when MadMen, a California based company with a bunch of stores across the US, goes public later this year. I went to one of their stores in West Hollywood and it was like a god damn Apple store for weed. Just great customer service, and lots of insane gourmet hipster weed products (fancy chocolates, cute little pocket vapes, swish body oils) and it blew my brain.
But, the very first proper weed stock, Canadian company Cronos (CRON), launched on the US stock market about a week ago. I decided to give them a whirl and buy 50 since they were only selling for $9 something.
I bought them using Robinhood — the app I mentioned in the first week, where it costs nothing to buy stocks. It's almost like Venmo for stocks, as one pal described it, and takes a few days to transfer money in and out. Side note: so far I am finding Robinhood a little confusing as a user, and much prefer how Ally shows me all my stocks and how they are going.
Sadly, I kind of buggered up the purchase from the start. I tried to buy them at market price, but the markets had just closed so Robinhood said it didn't go through and then I was glad cause all Trump started on the trade war chat more that afternoon and I knew it meant the stock market would probably crash. But then at 9.30am, the second the markets opened, my order went through (apparently it wasn't cancelled?) and then the stocks immediately dropped.
I plan on holding on to these for a long time, obviously, but it was a frustrating first day!
I'm also interested in watching Canopy Growth, one of the biggest weed stocks in Canada, which is also planning to launch on NASDAQ (one of the US stock exchange) soon. Just gotta figure out how I can afford more stocks AND good tickets to Beyoncé and Jay Z's just announced On The Run tour.
If the volatility and legality of the weed industry makes you a bit nervous but you still want to try and get involved, lots of people are looking at other side investment options, such as Scotts Miracle-Gro (SMG), a US lawn and garden business which also sells hydroponics equipment.
Another thing to keep in mind re the weed industry is that it's also been mainly companies led by white men that have gotten boosts in funding, while the arrests of marijuana use are predominantly black and latinos. In light of that, my suggested charity this week is Project Avary, which puts on programs and school camps for children who have a parent in prison.
And, here's a look at my stocks this week. After slamming UPS last weekfor being a boring blue chip that wasn't growing quick enough,some big analyst said people should buy UPS on the dipcause it pays such a good dividend (not all companies do this but it's when shareholders get a little bit back when the company is long-term profitable) and suddenly the price jumped up a few bucks.
If you've got any questions or queries or just interesting tales for me about your own stock life, please just hit reply and write to me. I've already got a bunch of ideas for future newsletters from all the emails I've got so far, PLUS quite a few emails mansplaining stocks, I am very lucky.
And yes I am still interested in MedMen once it goes public, despite this being one of their products: