If you are like me you have been watching the evolution of the marijuana sector with great interest. What seems like slowly but one day at a time, the use of marijuana both for medical and recreational purposes is being met with wider acceptance. And while 'wider' is an arbitrary term, never did I expect to see two states within the United States fully legalize its recreational use. Twenty years ago, that potential was unheard of.
So now in alignment with this evolution, the marijuana business has reached the public markets and as you could imagine, the sector is on fire.
But for some, myself included, there is still a moral dilemma I have been wresting with about investing in marijuana. As you probably well know, for years, smoking marijuana was regarded with such stigma. It was the terrain of the irresponsible, the lazy, and the outcasts of society most mentors around me would suggest. And I s hould know. I used to smoke. A lot. I was roughly a daily smoker, but not for any medical needs per se. My use was recreational. And while I believe everything happens for a reason, I experienced a great deal of criticism and stigma for using the plant at the time.
I have long since stopped using marijuana but am now witnessing the emergence of widespread acceptance and apparent truths about the plant emerging right in front of my eyes. It is quite a departure from the stories about the 'drug' that I was used to hearing when I was younger. Growing up with a 'smoking marijuana is wrong' mainstream narrative for so many years, while on the street, in real life, it was already so prevalent and obviously socially accepted underground it brings me pause in considering the swing of the story the other way - into full blown legal acceptance.
There are those who are still clinging to the past regarding whether or not someone should be allowed to smoke or use marijuana, b ut in my opinion the trend is in. Despite having grown up to lose interest in using the plant for my own purposes, and not otherwise suffering from any long term effects that I can point to, there is no question that resistance to its legal use is going to continue to fall, and investment in this sector has massive potential in the coming months and years. That said, just the same I have sat back to consider and evaluate how I can morally justify my investment in a sector I have been programmed for so many years to believe is wrong.
Nearly two years ago I had a go public marijuana venture available to be acquired on my desk. The deal eventually fell through, and since that time I admit I have sat on the sidelines, for the reasons I am describing herein. That said, I have recently come to terms with the dilemma, to the extent that I am now open to investing in the sector. Here are my reasons:
5- I Believe Each Individual is Responsible for Themselves.
Today, I chos e not to use marijuana, but I don't believe that means I should be making that choice for others. And that goes for both medical AND recreational use. In my opinion, to each their own, and as there are beneficial vs. detrimental effects to an individual who uses the plant, I believe that that individual needs to be responsible and hold themselves accountable for their own choices. Especially in a medical circumstance, who am I, nor anyone else who is not going through any of these issues to hold someone back from using this potential treatment? If someone is finding some degree of peace from using marijuana to help them treat some serious issues they are working through, then I do not believe I have any right to restrict or impose my view on their circumstances, unless of course their use is detrimental to society as a whole. And while it used to be widely believed and accepted that the legalization of marijuana carried a detrimental effect on society, significant evidence i s now emerging to suggest that the opposite is true.
4- There are Many more Harmful Legal Products in the System.
I would argue with you that smoking cigarettes is exceptionally harmful, but legal. Alcohol can create a litany of health issues (and some health benefits), but is legal. We allow companies like McDonald's to serve food that is so heavy manipulated it is barely passable as the food it is marketed and sold as, and it is legal. But this natural product that has been demonstrated to provide a number of health benefits is still illegal in many jurisdictions? In my opinion, to the extent it has harmful side effects is the respo nsibility of the individual to weigh the cost v. benefit in their own circumstances. (Ie. McDonald's exists, but I don't eat there, even though before I knew any better my first job was at a McDonald's). It should be the responsibility of each to educate themselves and make their own determination whether or not it is appropriate for their circumstances, not the state.
3- The Potential for Marijuana Research and Development holds Great Promise.
Research into the medical potential of marijuana itself was suppressed for many years even though it had been recommended as providing health benefits for nearly 5000 years. Once that veil was lifted, marijuana use has been proven to be effective in, at minimum, assisting in the treatment of a number of major health issues. But there are other expanded areas of research now underway as well, including methods of delivering the benefits of marijuana without having to smoke it, and the developme nt of products that provide the medical benefits of marijuana without the psychoactive side effects. There is great potential in these areas, so I believe it appropriate to support quality companies and management teams with these kinds of visions to advance research and the delivery of products in this realm.
2- The Cost of Enforcing Marijuana Related Criminal Activity is Atrocious.
If you have done any research into the enforcement costs associated with suppressing marijuana, you must agree the numbers are crazy. In Canada, and although a little dated, a 2002 the Senate report pegged the annual cost of cannabis to law enforcement an d the justice system at $300 million to $500 million. In the United States, Dr. Jeffrey Miron, visiting professor of economics at Harvard University suggested in his report that replacing marijuana prohibition with a system of legal regulation would save approximately $7.7 billion in US government expenditures on prohibition enforcement - $2.4 billion at the federal level and $5.3 billion at the state and local levels. Further, these expenditures are increasingly opposed to the will of the people, and in veritable democracies, the will of the people forms the rule of law. Personally, I do not want my tax dollars going into programs that suppress something that can benefit people, that a large proportion of the population is already doing and wants, and that costs so much to try and sustain and maintain the status quo, which is/was the enforcement and suppression of the marijuana industry.
1- The Social and Financial Benefits of Legalization are Rapidly Revealing themselves in Early Adopting Jurisdictions.
Colorado and Washington State are the first case studies in this regard, and the statistics are stunning. Colorado is reporting a 50% reduction in criminal activity. During the first month of legal marijuana sales in Washington state, stores sold just under $3.8m, which is expected to bring in more than $1m in state taxes. The state of Colorado has collected $34.9m in all marijuana taxes, fees and licenses since recreational sales became legal in January. That number includes medical marijuana taxes. Both states have also indicated they intend to reinvest the tax revenue into community services and education, which I suggest is a real positive.
Ultimately I could probably go on with my list, but I believe I have at minimum now painted the outline of my position. If you don't smoke marijuana, you don't have to. If you want to experience the potential benefi ts of marijuana without smoking it, those products are emerging. If you want to experience the potential benefits without getting high, those products are emerging too. You still have the personal power to elect to participate personally in your use of marijuana or not, but in the meantime, I would argue that resistance to removing regulation that suppresses its use (either active or by apathy) appears to be contributing to higher than necessary rates of criminal activity, extraordinary enforcement costs, and lost potential tax revenue, all the while impeding those who can benefit from it from gaining safe and reliable access.
So while there are many other areas of medical research that I support, I hereby also support the legalization of the medical and recreational marijuana sector globally, and equally why I am comfortable considering such companies in my investment portfolio.
Best of Luck,
Wall Street Contenders
About Wall Street Contenders
Wall Street Contenders is an emerging Small and Micro Cap Industry Newsletter.
I have over 10 years experience in the public markets, having worked with several junior companies in a variety of capacities including executive management, mergers & acquisitions, investor relations and communications. My ventures and those I have been involved in have raised millions of dollars, hit and missed, won and lost, and I suggest my experience behind the scenes may offer readers some rare insights and perspectives into the potential and the challenges facing start-ups and public companies in today's markets. I have a keen interest in emerging and disruptive business trends and am tracking my favorite sectors through Wall Street Contenders and my associated network of properties. I invite you to sign up for my newsletter and connect with me on Linkedin.
As of this writing, I do no t own shares in any marijuana companies. My Features are not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. Wall Street Contenders, its parent companies Animus Ventures Inc. and NewRock Market Advisors Inc., nor McMillan Strategies Inc., make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the author's only and are subject to change without notice. WallStreetContenders.com, Animus Ventures Inc., NewRock Market Advisors Inc., or McMillan Strategies Inc. assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within these articles and will not be hel d liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within these distributions.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.