“This is like a gold rush” The Marijuana Investment Boom

A Blazing Hot Year

The marijuana industry had a booming year in 2018. It grew in legitimacy, as Canada became the first industrialized nation to legalize, driving an investment surge and potentially yielding billions annually. Stateside, Utah and Missouri legalized medical marijuana, while Vermont and Michigan both voted in favor of recreational use. Topping it all off, the US FDA approved the first ever CBD-derived drug to treat epilepsy in children, and the new Farm Bill was signed into law, legalizing hemp and hemp-based CBD oil.

Boom Times

All this buzz has driven an investment boom, and a stock craze reminiscent of the late 90s dot-com bubble and the recent cryptocurrency fever. “It’s like the internet in 1997,” one Wall Street investor remarked. 

Although pot stocks didn’t necessarily perform as well as they have in years past, we saw major investments from huge multinationals, wealthy families and amateurs alike, indicating that they too, have gotten on the bandwagon. “This is like a gold rush,” former Mexican President Vicente Fox said during a recent appearance to promote a Canadian medical-marijuana company he is involved with.

Some investors are projecting a $100 billion dollar industry and big-time acquisitions are bolstering their bets. In 2018, six of the largest deals in the history of the marijuana industry were completed or announced.

Constellation Brands, which makes Corona and Modelo beers, invested $200 million in Canopy Growth, a Canadian cannabis operation. A few months later, Constellation doubled down and sank an additional $4 billion into Canopy, as the company’s founder commented on his confidence in the industry’s potential for explosive growth.

The Heineken brand has started selling sparkling water infused with THC, and Molson Coors teamed up with a marijuana producer to make their own cannabis-infused beverages.

We expect this enthusiastic speculation to surge in the year ahead. All signs suggest that deregulation will, indeed, continue. President Trump’s war on weed looks like it is indeed waning, as former Attorney General—and noted anti-pot crusader—Jeff Sessions, was unceremoniously removed from office last year. Under Sessions, the Justice Department sought to undo a defacto policy from the Obama administration of not interfering with states’ marijuana policy. President Trump’s new pick for Attorney General, William Barr, has stated in written testimony that he will not seek to continue the policy of cracking down on legal cannabis if he is confirmed by the Senate. As his confirmation seems more than likely, we can assume a return to a slightly friendlier marijuana posture from the federal government

These developments will almost certainly contribute to continued confidence from investors, who are snapping up pot stocks left and right, further propelling what is likely to be the next gold rush.