Special Free Report From The Motley Fool

By Jonathan Chevreau

Now that California has legalized the recreational use of marijuana (as of Jan. 1st) and Exchange-Traded Funds on both sides of the border have launched to capitalize on publicly traded cannabis stocks, it’s hard not to experience the kind of FOMO (Fear of Missing Out) that many conservative investors felt about bitcoin.

After all, pot is slated to be legal in Canada this coming July. California is the world’s single biggest market for marijuana and a cultural trendsetter for other states, but it’s hardly alone in going down the route Justin Trudeau has charted for Canada. Eight states plus the District of Columbia have legalized cannabis for recreational use by adults, while 21 more have voted to allow medicinal use, according to Bloomberg.

Among the states that can now legally sell recreational pot are Alaska, California, Colorado, Massachusetts, Nevada, Oregon, and Washington State; and it’s been proposed in Maine.

With pot already getting federal blessings in Canada, all ten Canadian provinces are at various stages of getting on board: Ottawa has left it to the provinces to license and oversee distribution and sale of cannabis. British Columbia, arguably the closest culturally to California, announced in December that legal pot will be able to be purchased in private and public stores, with a legal age of 19.

In Ontario the provincial government famously plans to open standalone stores run by the Liquor Board of Ontario (LCBO). The initial roll-out is for 80 stores. Quebec announced details of its marijuana bill in November, with the legal age to buy, use or possess pot set at 18, the drinking age. Alberta has introduced a bill requiring the Alberta Gaming and Liquor Commission to oversee private retail locations, with the province handling online marijuana sales. For the status of other provinces, click on this recent CBC story online.

Little wonder there is a gold-rush mentality among some retail investors, even though early in January the sector took a dive across North America after US Attorney General Jeff Sessions put the kibosh on federal cooperation when he said he will roll back the Obama-era “Cole memo” marijuana protections to the states.

That predictably brought out the “told you so” skeptics, while the true believers merely viewed it as the proverbial buying opportunity. A week later, pot stocks had larger recovered, so the mania appears to be back “on,” however overvalued the skeptics insist they now are. A notable case in point, on January 10th Maclean’s magazine published a story titled “Investors are delusional when it comes to Canadian marijuana companies.” In it, Queens University economics professor Alan Gregory pointed out many of these firms are valued in the billions of dollars but are generating no profits. “It’s not difficult to predict profit margins will fall under regulation and that current market cap valuations are predicated on unrealistic expectations.” And he expects the provincial agencies in Ontario and Quebec that will model distribution after government-controlled alcohol sales “will severely cut into these margins.”

Here at the Motley Fool, in the year just finished marijuana stocks generated more reader questions than anything but bitcoin, podcaster Chris Hill told listeners of his Motley Fool Money podcast in the 2018 stocks preview that aired on Jan. 5. David Kretzmann, analyst for Motley Fool Hidden Gems Canada, chose “Reefer madness” as the sector he’d be keeping an eye on in 2018.

He said investors have to answer the question of whether legitimate markets are forming in the marijuana space and whether legitimate companies are emerging that can benefit from these markets. If Canada legalizes in July of 2018, it would be the first major country to do so, and that could really legitimize the marijuana space and give companies a legal legitimate opportunity to compete, Kretzmann said.

The opportunity and the risk

“Clearly there is an opportunity here, billions or tens of billions of dollars, but with very few legal legitimate markets I still wonder if companies can succeed this year,” Kretzmann added. Legalization in Canada may be the first tipping point, “because they already have a fair amount of marijuana companies in Canada that are bracing for this recreational marijuana push. There is already some medicinal marijuana sold in Canada and some in the States but right now it looks very overheated.”

Indeed, the marijuana theme seems to invoke the classic meme that the Chinese symbol for crisis is composed of two Chinese characters respectively signifying “danger” and “opportunity.” That’s a bit of a misconception, as this Wikipedia entry explains, but even so you get the idea: High possible reward, high possible risk.

The four largest cannabis companies in Canada right now have a combined market value of $14.5 billion, and with trailing revenue over the past year of $100 million, these companies are trading for 145 times revenue. And that’s just the biggest four players, Kretzmann said: “There are a ton of other start-ups that aren’t even selling anything yet; there’s a lot of excitement here and I think there will eventually be an opportunity but I just wonder if these very early companies will be the ones to benefit.”

On the same podcast, Motley Fool chief investment officer Jason Moser and adviser on Million Dollar Portfolio said he is “On board with this. I think legalizing marijuana makes perfect sense for a lot of reasons; the big problem early on though and investors need to keep this in mind is the disconnect between the states that want to do it and the (US) federal government, which is still playing hardball. I think eventually that risk goes away as administrations change; it’s not like you need to jump into this thing head first now but I definitely think it’s a market worth keeping an eye on.”

Investors should look at how the market is developing in Canada first because if the country does honor its pledge to legalize it nationally and all provinces follow suit, it will provide an idea of how this space may shape up in the US and other markets if and when they jump aboard.

I must confess that until recently I personally was almost as wary of individual pot stocks as I continue to be about Bitcoin and cryptocurrencies. Back in 2016, my website FindependenceHub.com republished an essay by one marijuana skeptic that said Canadians should forget about buying Canadian marijuana stocks.” In those early pioneering days (long before there was any such thing as a diversified marijuana exchange-traded fund) the sector seemed fraught with junior or penny stocks, often subject to Internet manipulation and pump-and-dump schemes.

Still, those who took the risk may well have seen their speculations pan out:  marijuana stock prices have soared since 2016 as the early adopters seized on the apparent chance to get in on the ground floor of a major new industry: something that could be akin to tobacco, booze or other “sin” products. The bold (or foolhardy?) investors who embraced more speculative junior marijuana penny stocks have reportedly booked gains of as much as 3,000 to 5,000%.

Of course those jumping in in 2018 should view such price rises with trepidation: it would be like buying Bitcoin when it briefly hit $20,000 at the height of the mania late in 2017.

Also, consider that the barriers to entry are relatively low in the Canadian market: if and when demand ignites next July, it’s likely that the big boys – perhaps tobacco companies, other makers of sin stocks, agriculture companies and perhaps pharmaceutical giants – will jump aboard at the expense of the small growers and start-ups.

Even so, investors don’t seem to be waiting until July to act. As 2017 ended early adopters were booking massive gains. Canopy Growth Corp. (bearing the aptly named ticker symbol WEED on the TSX) saw its share price double while Aurora Cannabis Inc. (TSX:ACB) surged 140% in two months.

The question for investors is whether such gains can continue: the danger was revealed on January 4th with Jeff Sessions’ statement: buying into the hype could cause investors to make the cardinal mistake of buying high and selling low. Little wonder some analysts, including at least one at the Motley Fool, are recommending shorting some of these stocks. (The short candidate was none other than the aforementioned Canopy Growth).

Danger yes, but ah, the opportunity! Cannabis authority ArcView projects the North American legal-weed market to grow 26% compounded through 2021. If accurate, North American sales could be US$22 billion by 2021.  The arrival of at least two ETFs in 2017 only seem to have added momentum to the speculative fever and at least eight more can be expected to launch in 2018 either in Canada or the U.S. (of course, Canadians are free to buy pot ETFs trading on US stock exchanges as there are no longer any foreign content restrictions in registered accounts).

As I disclose in what follows, unlike cryptocurrencies, I personally have dipped my toe into marijuana stocks. I continue to stay clear of individual penny stocks, including marijuana penny stocks, but that doesn’t mean a diversified basket of more established players – as listed in the ETFs – can’t be considered.

Financial advisors and investment counselors cautious

To play devil’s advocate, most financial advisors I normally consult as sources are lukewarm about the sector. Adrian Mastracci, portfolio manager for Vancouver-based Lycos Asset Management Inc. reiterates my personal view that for those who feel they must speculate – and that’s the word for this — should limit the investment to the sector to no more than 5% of a total portfolio: so, for example, $50,000 on a $1 million portfolio. Actually, that’s way too much for my own risk tolerance: 1% or less is more my style in this particular case.

Even Matthew Ardrey, vice president and wealth advisor at Toronto-based TriDelta Financial – who generally favors alternative investments – hasn’t yet used marijuana stocks in client portfolios. “If someone wants to roll the dice on these, speculative is definitely a good word for it, especially since the run-up they have had.” However, “I just had a colleague who sold Canopy for a client after making over 100% return. His concern now is that they may be overvalued and due for a correction.”

Graham Bodel, investment counsellor with Vancouver-based Chalten Fee-only Advisers Ltd., says “a good business idea can be a bad investment at the wrong price.”   There’s plenty of hype about both marijuana and cryptocurrencies, “which doesn’t usually coincide with a good time to invest.   Good idea + good timing + the right price is a good equation for a speculative investment.”

Bodel says pot is still a small industry and constitutes a pretty concentrated focus for an investment.  “I’m all about diversification.  That said, everyone has a speculative itch and sometimes it just has to be scratched, even with something really speculative.  That is totally fine and healthy as long as it’s not too big a portion of your portfolio: I usually say to set aside maximum 5% for totally speculative investments and be comfortable that you’re willing to lose all of it.”

Bodel is also wary of industries that are subject to heavy regulation and taxation.  “My sense is that it won’t be like booze where brands can develop, at least not for a long time.  And I’m not sure you’ll have the same opportunities for patent/intellectual property protection that you would have in the pharma industry.  What is the ‘moat’ around this industry: barriers to entry, etc. that make help it sustain a decent return on capital?”

Clearly, investors need to view this trade as a speculation, one that may or may not pay off in the short term. Like cryptocurrencies, weed stocks are as apt to go down as up in the short term. I see this as a long-term play: as Bodel cautions, don’t invest money you can’t afford to lose.

Mark Yamada, president and CEO of PUR Investing Inc., says there is little doubt that something important is happening in both the marijuana and blockchain spaces “but the size and scope for each is unknowable at the moment. Blockchain has implications for banking, e-commerce and international money laundering. Marijuana has implications for all those, plus an aging population, edibles being the preferred delivery mechanism. We knew genetic engineering was a new field with tremendous potential when the Genentech IPO hit the market in 1980 but it took ten years before the stock made it back to its post-IPO high. Roche acquired the company decades later.”

8 more marijuana ETFs on the horizon

There’s no shortage of recommendations on individual cannabis stocks, both within the Motley Fool stable of newsletters and elsewhere. For true Fools who want to pick their own individual cannabis stocks, see this January 1st article on the best marijuana picks for 2018. In it, Sean Williams describes the sticky legal environment in the US for these stocks, concluding “investing in U.S.-based pot stocks isn’t such a great idea at the moment.”

Therefore, he says, in 2018 the best marijuana stocks to buy are “probably going to be in Canada.” Medical marijuana has been legal in Canada since 2001 and some domestic cannabis stocks were “marginally profitable” just on medical pot sales alone: you can imagine how the floodgates could open if recreational use does materialize as expected in July. (By the way, throughout the end of 2017, Williams profiled one marijuana stock each week for Fool.com, which you can find listed in this piece.)

Given my own conservative preference for a more diversified approach, this report focuses on seeking the safety of a diversified basket of marijuana stocks, which means exchange-traded funds or ETFs. There are at least two marijuana ETFs on either side of the border and the number is bound to increase, since few ETF makers can resist sector themes with this kind of apparent long-term upside.

Horizons ETF Management (Canada) Inc., maker of the pioneering HMMJ — more on which below — has also announced it will be launching a second marijuana ETF: in the second week of January it filed a preliminary prospectus focused on small-cap publicly traded cannabis companies listed on North American exchanges. The ETF’s name will be the Horizons Junior Marijuana Growers Index ETF (ticker HMJR on the NEO exchange; by contrast HMMJ trades on the TSX). The management fee for HMJR is 0.85%, high by ETF standards but probably worth it for the one-ticket diversified play on junior names most investors won’t be familiar with.

The two Horizons ETFs are passive index funds but on January 12 it was reported that Evolve Funds Group Inc. has filed a preliminary prospectus for Canada’s first actively managed marijuana ETF, with the ticker symbol SEED. The MER will be 0.75%.

Meanwhile, a half dozen more ETFs are in the works south of the border. On January 8, the print edition of the Wall Street Journal reported that “new and established ETF issuers alike have applied to list at least six marijuana-investment products and 16 bitcoin/blockchain-related strategies, according to Bloomberg ETF analyst Eric Balchunas.”

You can imagine how much further demand momentum a half dozen or more new ETFs could inject into the underlying stocks that no doubt will be in many of the portfolios! But they’ll need such momentum, since as one expert suggested late in 2017, while cannabis stocks could move higher still on momentum, “they need significant revenue growth to justify their huge market caps.”

Reasoning along the lines suggested by Bodel, I’d suggest new arrivals to this investing theme take a basket approach and limit the initial position. I personally have taken tiny – and I mean tiny! – positions in the two major cannabis ETFs described below. Partly, I believe in having to eat my own cooking and partly I hope the optimists are right and that even these small positions might grow to something significant in the medium term. But I’d be quick to take partial profits if and when they materialize.

The first major Canadian marijuana ETF: HMMJ

In addition to pioneering ETFs worldwide, Canada is also home of the world’s first major marijuana-focused ETF: Horizons Marijuana Life Sciences ETF (ticker TSX:HMMJ). The ETF attracted more than $100 million within the first month of its launch in April of 2017 and assets have subsequently reached $790-billion. With a combination of market growth and more late arrivals to the party, and barring a major reversal in the sector or across the general stock market, it’s only a matter of time before it reaches the magic $1 billion mark.

So if you agree with Sean Williams about starting your position with Canadian dope stocks, HMMJ could make a ton of sense. And writing in the Globe & Mail in mid January, newsletter writer Gordon Pape suggested that for aggressive investors wanting to get in on the “pot stock hysteria” – a sector he was so far reluctant to recommend – HMMJ would be the “best option.”

If you have trouble remember the ticker, just think the MJ stands for Mary Jane, a popular colloquial term for marijuana.  “The existence of the ETFs (e.g. HMMJ) make it a more sensible speculative bet,” Bodel says, “It’s very hard to pick winners at this stage so I’m much happier with the idea of betting on the industry via an ETF.”

But what about the newer ETFs that look to be focused on the US and global players? Even these appear to have hefty exposure to the pioneering Canadian pot stocks. Late in December, the ETFMG Alternative Harvest ETF (NASDAQ:MJX) was launched, the first pure-play pot ETF to be listed on a US stock exchange. In addition to owning some of the major Canadian pot plays, it also owns some US and global players, some of them more indirectly related than pure plays.

It’s not as simple as declaring the Horizons ETF to be exclusively a Canadian dope ETF and MJX to be only a US one. Managed by Horizons ETFs Management (Canada) Inc., HMMJ owns mostly Canadian stocks but MJX has significant holdings in Canadian dope stocks as well. ETF expert Tyler Mordy, CIO of Vancouver-based Forstrong Global Asset Management Inc., estimates the overlap at 52%. “But with about 57% of HMMJ currently in small and micro-cap stocks (and many of them not yet profitable), HMMJ has much more upside should the industry continue to proliferate. Plus, MXJ has a large exposure to tobacco stocks so HMMJ is more of a pure play.”

Mordy’s firm does not currently cover medical marijuana stocks nor do its client portfolios hold any of these ETFs. “However, the very successful launch (in terms of asset accumulation) of the HMMJ indicates evidence of momentum in the medical marijuana industry,” Mordy says, “And with the medical marijuana industry still at a very early stage of development (and exposed to a dynamic political environment), an ETF approach is an excellent way to diversify some of the idiosyncratic single-stock risks.”

HMMJ also has the benefit of a more certain path to legalization, given that Canadian prime minister Justin Trudeau included the promise as part of the election campaign that brought him to power.

In the US, MXJ faces a more uncertain legal climate. Sure enough, within days of the launch of MXJ and the run-up induced by California’s legalization, the sector was slammed when Jeff Sessions told U.S. attorneys he was rescinding the Obama administration’s guidance, which enabled states to legalize marijuana without federal intervention.

When the news broke on January 4th, MJX slumped by as much as 9% before partly recovering. The U.S. Marijuana Index dropped more than 20% that day but by January 11th had bounced right back, according to DailyReckoning.com. The site’s Ray Blanco – who produces a newsletter touting various dope penny stocks and start-ups – declared that “Sessions can’t stop U.S. pot.” Alaska, which has come to rely on pot tax revenue, intend to take a “business as usual” approach, while the California Bureau of Cannabis Control said it fully expects the Department of Justice to “respect the rights of states” given the public support of legal marijuana. On January 10th, Vermont became the first state to pass an actual bill legalizing recreational marijuana, according to Blanco, while Colorado – one of the first to legalize pot – said it will continue to exert its “right as a sovereign state to control what happens in our borders with regard to marijuana regulation and enforcement.” Massachusetts said it will “continue to move forward,” leading Blanco to conclude “every state with legal marijuana legislation on the books has announced that it will NOT bow down to the pressures of federal enforcement.”

Canada of course faces no such headwinds, even though Canadian pot stocks did no better that fateful day early in the new year: key components of HMMJ fell hard: Canopy Growth fell in Toronto by as much as 19% before partly paring its losses, ending the volatile day down almost 10%. In his analysis for the Globe, Gordon Pape noted that in the second week of January, “reality set in” and shares of Canopy Growth slumped 26% in three days. Aphria reached $24.75 on January 9 but retreated to $18.02 by Jan. 12.

Based on conversations I’ve had with experts, marijuana stocks are still pretty overvalued even after the mid-January bloodletting. I don’t pretend to be a deep value investor myself so certainly wouldn’t attempt to identify individual marijuana stocks either for purchase or for short sale.

And that’s all I suggest the average investor do here: next time there is significant weakness in the sector – as on January 4th — there may be an opportunity to establish a “starter position” in either MJX or HMMJ, or both.

Certainly if the 10-year bull market in the overall stock market continues, you could expect the rising tide to lift all boats, including dope stocks. Given that the bull market is getting long in the tooth, all bets would be off in the event of an overall market reversal. What goes way up can go way down just as quickly; no doubt the losses in overvalued cannabis stocks would be sizeable; so do your own due diligence and check with your financial advisor before proceeding.

Value investors taking a pass

For this report, it wasn’t hard to find skeptical opinions on marijuana stocks. I have a lot of respect for the opinion of value investor Norman Rothery of Stingy Investor (www.ndir.com/). Rothery, who writes for both MoneySense and the Globe & Mail, told me this for this report:

“While it is an exciting time to be in the pot business, I’ll be giving pot stocks a pass for now,” Rothery told me, “I tend to be overly conventional and conservative when it comes to banned intoxicants and the same thing goes when it comes to the stock market.  Pot stocks are, currently, problematic on both fronts.  The product is not legal for recreational use in Canada, but that should change next summer provided the Federal Liberals keep their word.  Legalization will entail big regulatory changes for the young industry, which means that pot stocks are best viewed as speculations rather than investments.  Add in lofty valuations and the risks are just too high for me.”

Chartered financial analyst Alan Fustey, vice president and portfolio manager for Winnipeg-based Index Wealth Management, says that although the Canadian marijuana industry will likely be profitable for some companies — both producers and retail distributors — “the pricing of the majority of the publically traded company shares reflects characteristics that are consistent with broad speculation rather than investment fundamentals. Estimates vary widely regarding the ultimate dollar value of sales for the marijuana market in Canada. As the industry develops, many of the new start-up companies that have been been raising funds from investors will inevitably fail. Company profitability will be determined by size and scale, which will allow for low wholesale prices of products. Very few companies will be able to achieve the necessary size and scale to maintain consistent profitability.”

“Pot-adjacent” plays for the skeptical

So if the pure plays are priced too high, what about related plays? Rothery concedes he’s more amenable to what he calls the “pot-adjacent” business, which has a less exciting return potential but also has lower downside. He cites beverage and food giant Pepsico Inc. (NASDAQ:PEP) which he speculates might benefit from pot users who get the proverbial “munchies” when they’re high. PEP trades at 24 times earnings and pays a 2.7% dividend yield.  It has also regularly grown its dividend for many years.

While Rothery didn’t cite it, another pot-adjacent business might be winery company Constellation Brands (NYSE:STE), which last fall said it would be acquiring almost 10% of Canopy Growth, making it the first major alcohol manufacturer (including all three of wine, spirits and beer) to invest in legal cannabis. Cautious souls (like me) might see that as a relatively painless way to stave off the marijuana FOMO. You can also see other pot-adjacent names in the ETFs, like lawn-and-garden care giant Scotts Miracle Gro Co. (NYSE:SMG).

ETF expert Yves Rebetez, of ETFInsight.ca, agrees marijuana stock valuations are stretched but concedes they could become even more so. “The easy money may have been made but that doesn’t mean there may be more easy money to be made on the momentum trade, based on the greater fool theory.” (Apologies to the Motley Fool brand!) Generally, Rebetez says ETFs at their core are best for very broad and razor-thin cost exposure. “Once you get into nichy, high beta and high volatility ETFs such as HMMJ with its concentration risk, the ride on the way up can be nothing short of exhilarating, but at some point could leave some with a bad ‘buzz.’ “

Sector and Concentration Risks of these ETFs

I would caution investors that even though ETFs can diversify the risk of taking a flyer on a single cannabis startup, HMMJ and MJX are focused not just on a single volatile sector, but as Rebetez notes are also a lot more concentrated in a few names than a more broadly diversified ETF that would serve as a “core” holding in the average portfolio. That puts marijuana ETFs squarely in the riskier “explore” category.

For instance, at the end of 2017, the biggest position in HMMJ (14.67%) was in Canopy Growth Corp., followed by 12.28% in the Ontario-based small-cap medicinal marijuana grower Aphria Inc. (TSX:APH), and 11.77% in Vancouver-based medical-marijuana producer Aurora Canabis Inc. That’s a pretty concentrated portfolio, with almost 40% of the fund in those three names. These are index weightings, based on Horizon’s North American Medical Marijuana Index. It also holds 8 to 9% each in GW Pharmaceuticals PLC, Scott’s Miracle Grow Co. and Medreleaf Corp. (TSX:LEAF) — the largest North American marijuana stock IPO of all time when it went public in mid 2017), 5% in Cronos Group Inc., and smaller positions in Canntrust Holdings Inc., Insys Therapeutics Inc., and Cannimed Therapeutics Inc. The management fee on the fund is 0.75%, which I think is reasonable, since I doubt many casual investors will be familiar with these stocks.

MJX: Adding global exposure and tobacco to the mix

In the US, MJX tracks an index of 30 global stocks that comprise the Prime Alternative Harvest Index. They are engaged in the legal cultivation, production, marketing or distribution of cannabis, cannabinoids or tobacco products. The index launched on December 18th, 2017 and goes through reconstitution quarterly. MJX pays an annualized dividend yield of 2.46%.

As you might expect, given Canada’s early start in the sector, MJX’s top five holdings are all Canadian and all but two of the top ten are Canadian, with more than half the ETF spread among the top ten. Its largest holding (8.72% at time of writing) is Toronto-based Cronos Group Inc. Fourth, at 6.6% is Smith Falls-based Canopy.

As occurred during the early-January scare, you can expect these two ETFs to move in lockstep with each other, although of course foreign exchange differences could arise. A lot of MJX’s US and international holdings are not pure cannabis plays but include major tobacco makers like Altria Group Inc., Philip Morris International Inc., British American Tobacco, Imperial Brands (LSE:IMB), and Japan Tobacco Inc. As a result, I’d expect MJX to be less volatile than HMMJ if markets go south, but if they explode higher MJX might not generate the highs HMMJ gives investors (pun intended).

Where to hold HMMJ and MJX

When it comes to deciding where to hold these ETFs, tax efficiency should be considered. Because I like to keep foreign content in non-registered portfolios below $100,000 (see this article I wrote for the Globe & Mail), I prefer to hold MJX in RRSPs or TFSAs, but especially in RRSPs, since MJX does pay a dividend.

You can hold HMMJ anywhere unless you think TFSAs and RRSPs are too precious to court the possibility of steep losses and should be restricted to fixed income. Clearly, if you knew absolutely in advance that HMMJ (or HMJR or SEED later in the year) will soar, you’d want it in a TFSA, maybe taking half profits on a double, then playing with the house’s money. On the other hand, the good chances of taking a loss would argue for holding it non-registered, where the capital loss could at least offset other winners. Oh if we only could divine the future!

The Foolish Bottom Line

Either of these two already-launched ETFs should suffice if you wish to speculate on what is still the ground floor of what could be a massive new industry. These are hardly value funds so cautious investors may wish to wait until the dust clears on the legal front in the US and for the Trudeau administration to honor its promise to legalize by July. Once it does, and if profits start to materialize as the optimists hope, that might be the time to increase one’s stake in the newer ETF launches, assuming they’re available by then.

It’s hard to predict how much momentum and hype will affect prices in the short term. But as occurred with Bitcoin, the risk is that by the time the trend is apparent to all and all legal hurdles have been passed, the investment train will have left the station.

Personally, I continue to avoid individual marijuana stocks and only waded into the ETFs late in 2017. For all I know the ETFs made it possible for the early speculators in the individual stocks to cash out. Even after the January 4th debacle, I’m up a bit but wouldn’t add much more until the legal status is clarified on both sides of the border.

I wouldn’t blame those sitting on the sidelines for doing so but if this investing thesis pans out, be prepared to have to say “woulda coulda shoulda” after July.



Jonathan Chevreau is founder of the Financial Independence Hub, author of Findependence Day and co-author of Victory Lap Retirement. He can be reached at [email protected]. He or family members own HMMJ, MJX, PepsiCo and Constellation Brands.