written by reader Marijuana Stocks

By Anonymous Questions, November 21, 2012

I was wondering what your take on the legalization on marijuana stands for investors? Any picks or suggestions on what to look for on this?

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Travis Johnson, Stock Gumshoe
November 21, 2012 10:09 am

Sorry, I don’t think it means anything for investors right now. No one’s going to get rich on the stock market with a company that sells an illegal product — we’re seeing relaxation of the laws in many states, both to decriminalize in a soft way and to allow for medical marijuana, but it’s still an illegal substance under federal law and it’s mostly the realm of small growers and “medical” retailers.

All of the pitches I’ve seen for marijuana stocks look like opportunistic pump and dump scams to me, though I confess that I probably haven’t glanced at every company. If we go to full legalization in every state and mass, regulated production like we have with tobacco, there may be some companies who are early on the jump in building plantations or retail networks who could be profitable, but I think that’s extremely unlikely. Marijuana companies, even the small ones who might be legitimate, are extremely constrained in terms of the advertising they can do, the financing they can get, and the planning they can do, knowing that it wouldn’t take much of a switch in the political tide — or much of a slipup in their operations — to have DEA agents put them out of business.

Most of the marijuana stocks that are close to being “real” are actually biotech stocks that are trying to develop treatments based on compounds that are in marijuana — like the one we saw teased last year, GW Pharma, that did pretty well for a while but has fallen off in 2012.

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M  A Johnson
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M A Johnson
November 22, 2012 9:19 pm

Any comments on government dictum report by N. Hodges how to really get rich?

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