Cannabis and EnergyI was reading a little about Cannabis and energy being similar to the gold and pick/shovel scenario. If you had sold picks, shovels, pans etc. you would have made a fortune but most gold miners ended up broke. The premise I read with energy was due to the fact that energy is half the cost of producing cannabis. With the overwhelming approval of medical cannabis and the beginning of the surge in recreational approvals it seemed to make sense to me. With the advanced stage in Canada I was thinking Encana might be a good play. I hope this starts a healthy discussion.
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
Cannabis production is not going to be a dominant part of the electricity business in Canada anytime soon. It will increase electricity demand, I expect, since reports are that pot growing is already consuming about 2% of the electricity in Denver after legalization, for example… but, like data centers, that kind of concentrated electrical use under one roof will also spur a lot of efficiency advancements over time as those companies try to use less energy (better air handling, more efficient grow lights, etc.).
I suppose there are likely some opportunities in the space, but I have a hard time finding them and every company at all marijuana related is so richly valued that there’s not much room for error. Without looking very closely at the details, my skeptical assumption is that I would not expect Encana or any other Canadian energy or utility giant to see a meaningful impact on their income statement from marijuana growers over the next five years. The business will be too small, and the electrical utilities so large and diversified, that changes to alternative energy generation incentives or electric car usage or data center placement will likely all be larger issues for the big energy companies, to say nothing of the general trend of electricity usage by consumers and businesses and the continuing push for efficiency.