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Canada on Wednesday became the first industrialized country to legalize the recreational use of marijuana – but at least one major investor still is not convinced that marijuana stocks are a good choice.
Canadian businessman Kevin O 'Leary, host of Shark Tank and president of O & M Shares ETF Investments, said Wednesday in an interview with Yahoo Finance's Market Movers that it "would never invest" in cannabis stocks, the product still being classified in the US Schedule I narcotic.
"I would never touch that. Never, "said O. Leary when asked if he would not invest in cannabis he was not completely legalized in the United States. " When you invest in a Schedule 1 narcotic, you run the risk of violating RICO's laws of assisting and encouraging the transfer of drugs. a narcotic drug listed in Schedule I.
A visitor smokes a joint at the first Cannabis Cup where self-cultivation and grass quality are encouraged in Tlajomulco de Zuniga, State of Jalisco, Mexico, March 18, 2018. ULISES RUIZ / AFP / Getty Images)
The US Drug Enforcement Administration classifies drugs in this category as "high risk of abuse" without "currently accepted medical use". Other Schedule 1 drugs include heroin and ecstasy. The use, sale and possession of marijuana is illegal in the United States at the federal level, although several states, including Colorado and Washington, have legalized individual use for recreational purposes.
As an institutional investor, O'Leary – colloquially called "Mr. Wonderful "about Shark Tank – said he would not risk being accused of help and being in favor of transferring an Annex I narcotic from one country to another.
"It's an extremely punitive place," O'Leary said. "I'm not going to look good after 26 years in prison, so the chance I'm going to invest in cannabis is zero."
O'Leary added that the investment in the pot stock is "a phenomenon of retail" and that "99% of institutional investors" are not involved.
I do not think that they have faced a lot of risks, from the legal point of view
Chris Walsh, founding editor and vice president of Marijuana Business Daily, said about retail investors a few hours later that Yahoo!
"I think smaller investors are looking for an opportunity in the North," said Walsh. "At least so far, I do not think they have faced a lot of risk, from a legal point of view."
The legal cannabis market is expected to explode in Canada in the coming years. According to a recent report by the Canadian Imperial Bank of Commerce, by 2020, the legal cannabis market in Canada will result in demand for more than 800,000 kilograms of retail value and about $ 6.5 billion. dollars in retail sales.
An employee who owns marijuana plants for medicinal purposes in the Tweed INC bloom room. In Smith Falls, Ontario, December 5, 2016. / AFP / Lars Hagberg (Photo credit should match LARS HAGBERG / AFP / Getty Images)
Investment in Canadian cannabis stocks has increased significantly in recent months. Tilray's shares (TLRY) have jumped more than 500% since its IPO in July. Canopy Growth Corporation (CGC) – the first listing of the New York Stock Exchange to the list of weeds – grew by about 97% in 2018. The sharp rise in stock prices has left some investors wary, which has led comparisons with past bubbles of Internet stocks and crypto-currencies.
"The question of whether it's good investments is a different matter," added Walsh.
For his part, O'Leary said that "the big opportunity" for investment in cannabis would come if the recreational and medical sectors of the industry separate.
"What you want in a space like this and what I was hoping for as an investor is being able to fork off the medical side of the CBD," O'Leary said. "There is a lot of interest in the world for the use of the molecule as a drug, far from the recreational product, which will still be controversial."
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