Examples of recent shocks to the industry include: the recent policy positions of both the Republican Party and by the Democratic Party; rumours that the DEA may reschedule Marijuana; reported medical breakthroughs; NASDAQ’s ruling against MassRoots; States voting on legalization; water usage by growers in states/areas with little water/rainfall; and so forth.
The election may prove to be a major event and stating to be in favour of legalizing marijuana does not mean that it is a priority. Be sure to monitor the policy positions of the candidates and the parties during the campaign. The outcome of the election could prove to be a prime example of Ecoforming and another is the recent graduation of Canopy Growth Corporation (CGC) to a national stock exchange (the TSX) on July 26th. Some recognized that CGC’s graduation to the TSX would have a spillover effect on the industry (i.e.: the share price of other Licenced Producers {LPs}) that either already meet or will soon meet the criteria needed to be listed on the TSX. This Canopy Growth Effect indeed rewarded Shareholders of some of the other LPs.
Another potential major shock to the industry is the possibility that Marijuana may be de-scheduled (from a Schedule I drug to a Schedule II drug). Exactly what will that mean to you the Retail Investor if its Schedule classification changes and is enforced consistent with all other Schedule II drugs? The DEA’s itself defines Schedule II drugs as:
Schedule II drugs, substances, or chemicals are defined as drugs with a high potential for abuse, with use potentially leading to severe psychological or physical dependence. These drugs are also considered dangerous.
Some examples of Schedule II drugs are: Combination products with less than 15 milligrams of hydrocodone per dosage unit (Vicodin), cocaine, methamphetamine, methadone, hydromorphone (Dilaudid), meperidine (Demerol), oxycodone (OxyContin), fentanyl, Dexedrine, Adderall, and Ritalin.
Schedule II drugs may have restrictions on advertising, packaging, and dispensing. It cannot be argued that migrating from Schedule I to Schedule II is favourable from an investor’s perspective; however, doing so includes cannabis in the same group of drugs as cocaine and fentanyl. Some have speculated that a possible Schedule II classification may apply only to medical marijuana by prescription and that recreational marijuana may have limits on the amount of, for example, THC, and be classified in a lower Schedule. In other words, marijuana may be included in different schedules depending on the THC/CBD level. Due diligence and continuous monitoring will prepare the Retail Investor for what is to come.
THIS INDUSTRY MAY BE IDEAL FOR THE PREPARED RETAILED INVESTOR
A well-developed plan that has an end goal and constantly monitored/revised to adapt in order to meet that end goal is paramount – like the chef, the end goal itself may need revision. Perhaps Yogi Berra said it best when he remarked, “You've got to be very careful if you don't know where you are going because you might not get there”. These are very true words for your Cannabis industry investment plan and strategy.
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