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Is Cannabis a Good Investment?

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In an interview with CNBC on Friday, Caro Pepper of Pepper International – an advisor to some of America’s wealthiest families – said that “the next huge growth area” is cannabis stocks. She pointed to the tremendous and, as-of-yet, relatively untapped medical potential of the plant, and implied that its potential for incredible growth as a cash crop in areas where it’s legalized make it more attractive than less tangible investment commodities.

NYSE and Nasdaq now both feature cannabis companies, though, for now, those companies are Canadian, where recreational marijuana is legal nationwide. One of these firms saw a 65% increase in stock prices to date, while another has risen over 115% in the same time frame.

According to Pepper, the effect of Canadian legalization on the market has “blown through expectations,” adding that some Canadian-based firms were even doing European exports now.

Pepper also pointed to the opening up of research on cannabis as a very good sign for investors, specifically citing advances made in treatments for arthritis and epilepsy using cannabis-derived (and now FDA approved) drugs.

When compared to other recent large-growth phenomena – such as bitcoin and other cryptocurrencies, which, in the case of bitcoin, ballooned to prices of over $19,000 at the end of 2017, and now, not even eighteen months later, sells for only around $4000 – Pepper indicates that cannabis’ existence as a physical, tangible commodity protect it from such wild fluctuation.

For now, with ten states having legalized cannabis, opportunities for small-business investing has been fantastic, but once nationwide legalization takes effect – as many experts predict it will within the next half-decade – Pepper says she believes that big tobacco and soft-drink companies will take over the market.

One final thing Pepper points to in favor of cannabis investment is that often the supply chain, from seed to cash register, is controlled by one or relatively few companies. This helps to ensure the stability and consistency of product and is likely to remain a trend within the industry.

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