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Marijuana Stocks

Cannabis Plays the Long Game

Cannabis is the longest of long games.

I mean that in two ways, both of which are critical for investors.

Let me explain.

Humans have been using cannabis – the flowering plant family that produces both the psychoactive drug marijuana and the fiber hemp – since prehistoric times.

In fact, similar to domesticated dogs, marijuana “coevolved” with humans over some 15,000 years. The plant so radically adapted its DNA to please humans (who returned the favor by spreading it around the globe) that a wild version of cannabis no longer exists.

The use of marijuana to alter consciousness may have played a critical role in the rise of agriculture and complex societies. The ancient Greeks and Romans enjoyed it. So too (probably) did William Shakespeare.

As for hemp, it made the sails and rigging that powered Christopher Columbus’ trip to the New World. The Gutenberg Bible was printed on it, among many other documents seminal to human civilization.

So it’s a very long game indeed that this ingenious plant has been playing: Pick the most powerful species on the planet and cater to its desire for intoxication and its need of a long-fiber industrial material. By doing so, guarantee that your DNA will survive and spread globally.

Yet the history of cannabis most people today have in mind is the relatively brief period of prohibition that began in the 1930s.

That’s now changing, as legalization of marijuana continues to spread across North America. Medical marijuana is now legal in 33 states and Washington D.C., and 10 states and D.C. have legalized recreational pot. Canada has legalized it at the federal level.

As a medicine, cannabis is changing the lives of people who suffer from various diseases. Early Investing Co-Founder Adam Sharp says, for many chronic conditions, “It’s probably the most effective and least harmful treatment around.” In fact, cannabinoid receptors throughout the human body react to cannabis in terms of appetite, pain sensation, memory and mood. And that may be the reason cannabis is being explored as a new treatment for so many illnesses.

One group that has far too much experience with health problems and psychological trauma, veterans, is advocating for further research and access to medical marijuana.

While the potential benefits for veterans and other groups are substantial, investors too sense a once-in-a-lifetime opportunity. And they’ve been pouring money into marijuana stocks to take advantage of it.

Yet the road for pot stocks has been a bit rocky of late. And this is where the other long game comes in.

Marijuana is a nascent industry with a bunch of problems yet to solve: oversupply, uneven regulation, volatility and a lack of institutional investors, who tend to enter new industries later than retail investors. But there is little doubt the cannabis industry will continue to grow, which makes right now a great “buy low” opportunity for the long term.

It may be a long game, but it’s one worth playing.

Enjoy your day,

Matt


About

Matt has worked as an editorial consultant to the International Monetary Fund, the World Bank, the Economist Intelligence Unit and other global macro-institutions. He wrote about markets and economics for U.S. News & World ReportBloomberg News and Investor’s Business Daily, among other publications. He also worked for several years as head of political economy for a Financial Times-owned macroeconomic consulting firm, advising hedge funds around the world. Matt’s claim to fame is that he’s interviewed two U.S. presidents and has spoken with five Federal Reserve Chairs from Paul Volcker through Jerome Powell. Matt also served as The Oxford Club’s Editorial Director for two years.

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