Summary
In recent weeks, there’s been a near-euphoria about the growth and expansion of legalized marijuana and investment opportunities associated with it.
AdvisorShares launched the first U.S.-listed ETF offering targeted cannabis/marijuana exposure (combined with alcohol and tobacco stocks) in mid-December.
At AdvisorShares, we’ve always talked about only investing in what’s federally legal. It’s an extremely important distinction to make.
By Dan Ahrens, AdvisorShares COO and Vice ETF portfolio manager
In recent weeks, there’s been a near-euphoria about the growth and expansion of legalized marijuana and investment opportunities associated with it. Topping off that euphoria was the recent legalization of recreational marijuana use in California. Legislation in Vermont soon followed.
Since AdvisorShares launched the first U.S.-listed ETF offering targeted cannabis/marijuana exposure (combined with alcohol and tobacco stocks) in mid-December, I’ve been quoted in the press many times talking about the tremendous upside potential that investing in cannabis-related companies can offer and how cannabis investing is just in its infancy.
I still believe that, but I am afraid. In my opinion, a lot of “hot” money has flowed into marijuana-related investments in recent weeks and may be unnaturally propping up the prices of marijuana stocks. But that’s not what my main fear is based on.
At AdvisorShares, we’ve always talked about only investing in what’s federally legal. It’s an extremely important distinction to make. We’ve also stated that a purely marijuana/cannabis-related fund in the U.S. would not work. We’ve turned down multiple entities that wanted to create one. There are not enough large, U.S.-exchange-listed, federally legal companies to invest in. Investing in other companies, such as small, U.S.-based over-the-counter or Canadian companies that actually grow, transport or sell marijuana, is quite possibly illegal – but that’s not for me to decide.
In the first week of January, Attorney General Jeff Sessions dropped a bomb. Sessions issued a memorandum rescinding prior U.S. Department of Justice guidance on the federal prosecution of marijuana offenses. This included the “Cole Memo” issued during the Obama administration that basically called for a “hands-off” enforcement approach.
credit:seekingalpha.com
