Author Topic: Would you invest in a marijuana ETF?  (Read 1347 times)

frozen

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Would you invest in a marijuana ETF?
« on: December 07, 2017, 06:18:22 PM »
Would you invest in a marijuana ETF?
Hereís an article about it: https://www.forbes.com/sites/trangho/2017/12/03/how-to-buy-marijuana-stocks-quickly-and-easily-with-this-new-fund/#310d1bc258de

I am not into pot at all, but I wonder about the money making opportunity as it is gaining more acceptance in the US.

maizeman

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Re: Would you invest in a marijuana ETF?
« Reply #1 on: December 07, 2017, 06:33:46 PM »
I would not.

I think legalization across the USA is likely, and revenue and profits of marijuana growers and retailers are likely to grow significantly faster than the average company. But I also think that current P/E ratios for marijuana stocks have this potential for faster growth already priced in.
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daverobev

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Re: Would you invest in a marijuana ETF?
« Reply #2 on: December 08, 2017, 11:10:29 AM »
There's one in Canada, been around for a little while, and of course with full legalisation of pot happening next year here things have been a little crazy.

Ticker is HMMJ (.TO).

http://quote.morningstar.ca/quicktakes/etf/etf_ca.aspx?t=HMMJ&region=CAN&culture=en-CA
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moof

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Re: Would you invest in a marijuana ETF?
« Reply #3 on: December 08, 2017, 12:01:42 PM »
There is a short term growth spurt that is easily mistaken for explosive exponential growth, but pretty soon demand will plateau.  Competition will drive margins down as supply stabilizes with demand.

So while there may be short term money to be made investing during the initial growth phase, the longer term pot outlook is that of any other easily grown crop.  Expect pot investments to turn into dividend stocks.

Eventual easier regulations will also lower the barrier to entry for competition, making a lot of the current one off quasi mom and pop suppliers less competitive.

So would you buy into a cotton ETF?  How about a chicken ETF?

Retire-Canada

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Re: Would you invest in a marijuana ETF?
« Reply #4 on: December 08, 2017, 12:40:44 PM »
No. I invest in broad market index etfs.  I'm not chasing after different sectors.

maizeman

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Re: Would you invest in a marijuana ETF?
« Reply #5 on: December 08, 2017, 01:26:19 PM »
I'd be very bullish on a beef ETF. ;-)
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ILikeDividends

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Re: Would you invest in a marijuana ETF?
« Reply #6 on: December 08, 2017, 04:27:36 PM »
Would you invest in a marijuana ETF?
Hereís an article about it: https://www.forbes.com/sites/trangho/2017/12/03/how-to-buy-marijuana-stocks-quickly-and-easily-with-this-new-fund/#310d1bc258de

I am not into pot at all, but I wonder about the money making opportunity as it is gaining more acceptance in the US.

I would not.  I have nothing against it, per se.

Strike 1: too narrow of an ETF for me.
Strike 2: I have no reason to believe that business is particularly attractive; although I admittedly haven't looked into it.
Strike 3: Regardless of how attractive that business is now, I am dubious that it will remain as attractive, when the feds legalize pot, and private labels, Amazon, Costco, Walmart, big agriculture, etc, all stampede into the party.

At the end of the day, it's just another agricultural commodity. They may be able to fetch a premium price for their product, but right now, no one who is really big is in that game yet; not that I've heard of, anyway.

"Amazon Primo." Yeah, that would be a kick.  Alexa, buy me 5 grams of Amazon Primo.  No, make that 10 grams.  No, oh hell, just make it an ounce.  Put that on a rush, would ya?  Oh, and a few dozen boxes of assorted cookies, too. I'm almost out. Oh, one more thing: go ahead and get a crash helmet with a retractable face guard. You've got my hat size, right? Don't want any more accidents.
« Last Edit: December 08, 2017, 05:12:19 PM by ILikeDividends »

former player

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Re: Would you invest in a marijuana ETF?
« Reply #7 on: December 09, 2017, 05:51:20 AM »
You would be taking a punt on Jeff Sessions' desire to crack down on marijuana and whether or not he stays as Attorney General.  More of a gamble than an investment, I would have thought.
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kayvent

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Re: Would you invest in a marijuana ETF?
« Reply #8 on: December 09, 2017, 04:00:23 PM »
I think there is a ceiling to how big the marijuana industry can get. Because of that, I wouldn't invest in an marijuana ETF. I don't think it can get very high.

steveo

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Re: Would you invest in a marijuana ETF?
« Reply #9 on: December 09, 2017, 10:57:03 PM »
No. I invest in broad market index etfs.  I'm not chasing after different sectors.

Exactly. I smoke and eat marijuana but I won't invest in an ETF that is based on it.

libertarian4321

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Re: Would you invest in a marijuana ETF?
« Reply #10 on: December 10, 2017, 06:34:04 AM »
I might throw a couple thousand at this just as a "screw you!" to Trump and Sessions.

Eucalyptus

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Re: Would you invest in a marijuana ETF?
« Reply #11 on: December 11, 2017, 03:15:02 AM »
It would probably be more interesting if it included Hemp production and Hemp related industries, assuming more countries legalise hemp production. Hemp has a lot of potential uses... not just clothing but also things like hempcrete-quite an excellent building material with negative carbon impact

ILikeDividends

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Re: Would you invest in a marijuana ETF?
« Reply #12 on: December 11, 2017, 06:10:08 PM »
It would probably be more interesting if it included Hemp production and Hemp related industries, assuming more countries legalise hemp production. Hemp has a lot of potential uses... not just clothing but also things like hempcrete-quite an excellent building material with negative carbon impact
Cannabis is possibly one of the oldest domesticated crops.

While hemp and what is contemporaneously known as marijuana share the same cannabis origins (much like broccoli and cauliflower are both cultivated strains of the cabbage flower), they have diverged so much that they are barely recognizable as plants sharing the same genetic heritage.

Hemp has only trace levels of the THC content that marijuana has.  So minimal, that you would likely get sick, before you got any appreciable psychoactive effects from smoking or ingesting it.

There are no barriers to hemp products, whether as food derived from the seeds (extremely nutritional, by the way), or fiber products, in most of the industrialized world.  However, the USA is currently the most unfriendly place to grow hemp (even though hemp-derived food and fiber based products are legal to import, sell, and transport via common carrier across state lines).

Marijuana, on the other hand, is only legal to grow in a few states, and it is still a crime to transport it across state borders, at a federal level, or even intrastate, using a common carrier -- even in those states where it is legal to grow.
« Last Edit: December 11, 2017, 06:31:16 PM by ILikeDividends »

Syonyk

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Re: Would you invest in a marijuana ETF?
« Reply #13 on: December 11, 2017, 08:26:49 PM »
Investing in something that is federally illegal, "legalized" by a few states, by grace of the previous administration saying, "Eh, we're not going to bother you for this... for now..." in a memo... is one of those unique brands of stupidity.

No, I wouldn't invest in a marijuana ETF, or anything else of the sort.

The businesses are running high risk businesses (owners of a halfway successful pot shop are federally felons by quantity sold), on a cash basis, with a bunch of high theft target products.  Why would you invest in that?
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Paul der Krake

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Re: Would you invest in a marijuana ETF?
« Reply #14 on: December 11, 2017, 10:30:14 PM »
Unless they start sending freebie samples, no.

Acastus

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Re: Would you invest in a marijuana ETF?
« Reply #15 on: December 12, 2017, 12:03:30 PM »
The current regime uses the "tough on crime" stance to sound like they know what they are doing. Given that, the risk of the Feds confiscating the assets of the Mary Jane businesses is too great. I would stay away at least until there is a new sheriff in DC, or a miracle occurs and pot is removed from the Schedule 1 list.

kayvent

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Re: Would you invest in a marijuana ETF?
« Reply #16 on: December 12, 2017, 06:34:24 PM »
My previous post in this thread was a joke. This is a serious post.

From my understanding, there is three main suggested uses of marijuana: medicinal (cure), pain management, and recreational. In my province, recreational drugs like tobacco and alcohol carry a 300% and 100% tax, respectively. The initial suggested sales tax alone is 26.5% for marijuana (I think that's way too low) and the governments have said it is only that low to drive out the black market. It will rise over time. I'll be honest, I think the initial growth of these companies may will be gigantic when any of the federal governments of NA legalize; however, in the long term I'm doubtful to see sustained growth in industries with triple-digit taxes.

I have little hope that the broad market will have sustained growth over a long term. That leaves only medicinal marijuana and pain management. The second Johnson & Johnson or Pfizer find whatever cocktail of chemicals in marijuana that could have some beneficial effect, they will isolate it, purify it, patent it, and sell it. At that point, I'd rather buy a Pharma ETF than a Marijuana ETF.

ILikeDividends

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Re: Would you invest in a marijuana ETF?
« Reply #17 on: December 12, 2017, 07:35:00 PM »
I have little hope that the broad market will have sustained growth over a long term. That leaves only medicinal marijuana and pain management. The second Johnson & Johnson or Pfizer find whatever cocktail of chemicals in marijuana that could have some beneficial effect, they will isolate it, purify it, patent it, and sell it. At that point, I'd rather buy a Pharma ETF than a Marijuana ETF.
Your mistake is in believing that Pfizer and Johnson & Johnson are motivated by good will, rather than by profits. This feat you describe was accomplished long ago.  It's called, "Marinol."  The distinction between that and marijuana is that Marinol is pretty much like killing a fly with a sledgehammer.  Sure, the pain is gone, but so is your consciousness, along with your ability to interact with the rest of the world in any meaningful way.

The obvious question is why do we need big pharma to market a drug at a 10,000% markup which already occurs in nature?  Look at Nicorette. You can pay $60 for 10 cents worth of gum, and it has no unbiased statistics to support a position that it reduces tobacco dependence within a margin of error.  All it really does is perpetuate that dependence, and pull all of your dental-work out, while producing out sized profits for pharmaceutical companies and dentists.

The revolving door between the FDA administrators and "Big Pharma" executives should sufficiently explain why taxes on tobacco keep going up to keep its retail cost in parity with so-called pharmacological "solutions." Follow the money.  It will be the same dynamic with Marijuana, once it is legalized on a federal level.
« Last Edit: December 12, 2017, 08:04:36 PM by ILikeDividends »

kayvent

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Re: Would you invest in a marijuana ETF?
« Reply #18 on: December 13, 2017, 05:12:26 AM »
I have little hope that the broad market will have sustained growth over a long term. That leaves only medicinal marijuana and pain management. The second Johnson & Johnson or Pfizer find whatever cocktail of chemicals in marijuana that could have some beneficial effect, they will isolate it, purify it, patent it, and sell it. At that point, I'd rather buy a Pharma ETF than a Marijuana ETF.
Your mistake is in believing that Pfizer and Johnson & Johnson are motivated by good will, rather than by profits. This feat you describe was accomplished long ago.  It's called, "Marinol."  The distinction between that and marijuana is that Marinol is pretty much like killing a fly with a sledgehammer.  Sure, the pain is gone, but so is your consciousness, along with your ability to interact with the rest of the world in any meaningful way.

The obvious question is why do we need big pharma to market a drug at a 10,000% markup which already occurs in nature?  Look at Nicorette. You can pay $60 for 10 cents worth of gum, and it has no unbiased statistics to support a position that it reduces tobacco dependence within a margin of error.  All it really does is perpetuate that dependence, and pull all of your dental-work out, while producing out sized profits for pharmaceutical companies and dentists.

The revolving door between the FDA administrators and "Big Pharma" executives should sufficiently explain why taxes on tobacco keep going up to keep its retail cost in parity with so-called pharmacological "solutions." Follow the money.  It will be the same dynamic with Marijuana, once it is legalized on a federal level.

You misread me. I'm saying Big Pharma are profit drivers. Marijuana is a neurotoxin, Big Pharma wants to sell you drugs; therefore, when they do see some way to do so they will. If I had to bet on stocks in says HMMJ vs Big Pharma doing this first and better, I'd bet either the latter or the former is getting acquired.

Mighty-Dollar

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Re: Would you invest in a marijuana ETF?
« Reply #19 on: December 14, 2017, 11:33:35 PM »
Would you invest in a marijuana ETF?
No. Marijuana stocks are way over hyped. Even the "larger" companies (which are still small) are trading at price to sales ratios in the 30's -- that's not even price to EARNINGS! These companies are buried in red ink right now. And the Trump administration isn't going to legalize pot. If pot is ever legalized at the Federal level then watch out for the big boys like Phillip Morris to swoop in and put these little companies out of business.

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Re: Would you invest in a marijuana ETF?
« Reply #20 on: December 15, 2017, 08:49:26 AM »
Your money invested in this could go up in smoke.

bridget

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Re: Would you invest in a marijuana ETF?
« Reply #21 on: December 15, 2017, 09:01:13 AM »
No, mostly because almost all financial systems are federally regulated. Marijuana growers have a famously hard time even doing things like getting bank accounts or basic tax and legal advice (and operate mostly in cash) because itís still federally criminalized, and there are a million difficult-to-apply regulations about assisting criminal enterprises that make them super difficult to deal with.

Once itís eventually legalized, it will be a lot less valuable of a sector because supply wonít be constricted by risk. Itíll just be like having some stock in Anhauser Busch.

sherr

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Re: Would you invest in a marijuana ETF?
« Reply #22 on: December 15, 2017, 09:41:47 AM »
Your money invested in this could go up in smoke.

On the other hand it might grow like a weed.

Don't let the critics blunt your enthusiasm.
« Last Edit: December 15, 2017, 09:43:26 AM by sherr »

Retire-Canada

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Re: Would you invest in a marijuana ETF?
« Reply #23 on: December 15, 2017, 09:45:29 AM »
Your money invested in this could go up in smoke.

If you want to achieve FIRE someday you'll have to get some smoke going first.

ChpBstrd

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Re: Would you invest in a marijuana ETF?
« Reply #24 on: December 15, 2017, 10:30:26 AM »
The attraction is they would sell an addictive substance. This is why companies like Altria (nicotine) and Coca Cola (caffeine) have done so well for investors over the decades. If deregulation occurred, growth could go viral as more addicts are created.

The repulsion is that when a sector draws lots of enthusiastic public attention and declarations that it must be The Next Big Thing, there is a natural incentive for people to throw together some incorporation papers, write a 10k with stock photos of industrial production going on, collect millions of dollars from individual investors, pay themselves millions of dollars in salaries and options, and then fold alongside everyone else when the hype dies. The dot com, gold mining, and clean energy industries are examples of this dynamic. Penny stocks and busted dreams galore. Second, I'm not sure what the first-mover advantage would be for grass production. Upon full legalization, what moat would these little companies have to prevent Altria, Monsanto, or any multi-billion dollar pharma company from taking market share and out-innovating the established players? What would stop regular farmers from beating them by selling hay bales of dope at your local farmer's market? After all, a quarter bag is easier to produce than a half pint of whiskey (addictive substance = alcohol) and look how fragmented and low-margin that industry is.

As Retire-Canada points out, we're all better off in the indexes than we are making bold predictions and stock picking. Beware the "wisdom" of crowds and resist any "theme" the financial media hypes. Also watch for fly-by-night public companies.