Cannabis Investors, Proceed With Caution

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by: Hedgeye
Summary

Investors should pump the brakes on any near-term boom expectations for the cannabis sector.

Previous states that passed legislation on legalizing recreational marijuana took two years or more to actually start selling it.

Canada legalized recreational marijuana at a federal level, but it's the 38th largest population country in the world. So how big is Canada really going to be long term?

Just How Investible Is The Cannabis Sector?

That's one of the key questions addressed by our Cannabis analyst Shayne Laidlaw in this video. FYI - Hedgeye officially launched our new Cannabis research sector earlier this month.

Laidlaw provides a brief recap of our analyst team's debut "Black Book" and advises some caution. He explains that investors should pump the brakes on any near-term boom expectations for the industry as a whole, given the rapidly changing regulatory environment in the U.S. and around the world.

"It's a very dynamic industry and moving in the right direction from a growth perspective," Laidlaw explains in the clip above. "But this is still 50 separate markets from a state perspective [in the U.S]. There's nothing done at federal level."

Laidlaw cites previous states that passed legislation on legalizing recreational marijuana still taking two years or more to actually start selling it.

And while Canada became the most prominent country so far to legalize recreational marijuana at a federal level, Laidlaw adds another caveat to that development:

"It's the 38th largest population country in the world. So how big is Canada really going to be in the grand scheme of things, long term?"

Bottom line? While there is money to be made in the industry, expectations should be tempered, Laidlaw concludes.

Watch the full video above for more.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.