So You Want To Invest In Marijuana!

With Canada legalizing cannabis on Oct. 17, early investors are seeing huge returns. Will the good times last?

- Silvia Killingsworth

Amid a stock market rout on Oct. 10, shares of Aphria Inc., a cannabis producer, jumped as much as 17 percent after a report that tobacco giant Altria Group Inc. was interested in buying a stake in the company. Other pot stocks jumped on the news, and Altria’s shares rose, too.

Investors have been cannabis crazy, bidding up stocks in pot-related companies. The Bloomberg Intelligence Global Cannabis Competitive Peers Index rose 103 percent in the 12 months ended on Sept. 28, outpacing gold, Bitcoin, and the S&P 500. Investor enthusiasm hasn’t been hampered by the fact that most weed stocks lack earnings.

Outside the equity markets, though, pot is taking a little longer to catch on. Because it remains illegal on the federal level in the U.S., there are many barriers cannabis companies have to overcome before pot becomes a full-fledged financial asset.

Aleafia Health Inc., an Ontario-based company that operates medical marijuana clinics across Canada and grows pot, recently filed to list on the Nasdaq. “Given the excitement in the industry, billions of dollars are being raised through equity,” says Benjamin Ferdinand, Aleafia’s chief financial officer. His company’s stock already trades on the Toronto Stock Exchange. But if it wants to list in the U.S., Aleafia can’t have any cannabis holdings stateside.