A very good friend of mine asked me this week if she should invest in a cannabis company.
My answer was “I don’t know.” Because I have no idea who the winner, or winners, will be.
Here’s an interesting piece of information…
As you may know, 2018 has been a monumental year for the legalization of marijuana. Canada made it legal to use marijuana for recreation, as did the state of Vermont. Beer, wine and spirits company Constellation Brands (NYSE: STZ) invested in cannabis company Canopy Growth (NYSE: CGC), and tobacco company Altria (NYSE: MO) announced on Friday that it was investing $2.4 billion in Cronos Group (NASDAQ: CRON), another pot company. Yet the marijuana exchange traded fund (ETF) Alternative Harvest (MJ) is down 36% from its all time high.
Why is that?
Well, for starters, most if not all of these cannabis companies are losing money. Even the well capitalized ones. I know that their goal is to focus on growth and sacrifice profits in the short run, but I still don’t know who will end up winning.
I myself have not started a position in any cannabis company as of yet.
I will post more on this sector as time goes on, so keep tuning in!
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