Cannabis stocks took off in 2018, but the euphoria quickly faded, echoing the sudden rise and fall of Bitcoin. Despite the current difficulties, cannabis is a long-term growth opportunity, even in the face of regulatory hurdles.
At the Las Vegas SALT conference, Ron Geffner of Sadis & Goldberg, and the CEO of 14th Round, Trent Overholt, discussed navigating the new frontier of cannabis investing.
Sadis & Goldberg is a New York law firm that focuses on financial services. 14th Round is a design and technology company that claims to be "building the best brands in cannabis."
The current regulatory environment is tough because it is a patchwork. Every state has different regulations. Meanwhile, the federal government looms in the background.
"We see the challenges of the biggest and best operators, and even they are struggling to operate with this patchwork of regulations," Trent said at the conference, which features key figures from business and government.
Many investors focus on the marijuana growers. The big players in the growers area are Canopy Growth (CGC), Tilray (TLRY), and Aurora Cannabis (ACB).
Cannabis Pet Products?
But it's not just combustibles, but vaping, CBD oil and hemp oil that offer tremendous growth as well. The panel discussed how Martha Stewart is partnering with Canopy Growth to launch a new line of CBD-based animal health products. One of the aims is to create trust with the public to help offset the stigma associated with marijuana.
Grover Norquist, the president of Americans for Tax Reform, commented on the federal government's current perspective on the future of marijuana legality.
Norquist covered the government's progress on the cannabis front. Cannabis remains an illegal drug from federal standpoint. And the government is content to let the states take control of the issue. Norquist compared marijuana's state-by-state progress with the December 2018 passage of the criminal justice reform bill, called the First Step Act.
On that issue, Texas took the lead with criminal justice reform. After the changes were implemented and studied, other states followed suit.
Norquist said that a key change is likely coming this year. Legislation called the STATES Act would move the marijuana business into the regulated banking sector. Norquist said that he was told President Trump recently reiterated a pledge to sign the bill.
Despite all of the regulatory challenges, cannabis is a fast-growing industry and investor interest remains high.
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