From London to New York, Hong Kong to Tel Aviv, you can walk down any street to smell the investment opportunity. Its in the air, literally – and its called weed.
Swiss bankers, Wall Street jocks, money- laundering financial advisers are all jostling to get on the cannabis bandwagon. It is still held out by many in the financial community as something unsavoury. But there are huge professional fees to be earned from turning this fragmented cottage industry into a “well-run” sector that established investors want to back.
Canabis is still illegal in most of the world’s major financial centers, but the law-enforcement authorities do nothing to prevent it. And its not young punks who are smoking in public, on their way to work, or on street corners, in bars, even in the gym. Its 40-somethings in employment, some in senior jobs, steeling themselves with a toke on a joint before work, or during work; getting ready for their commute with a little THC infused chocolate.
Now the Cannabis industry needs to ask itself: Do we even want the creepy Banksters who are circling the industry, rubbing their clammy hands?
Marlboro cigarette maker Altria last month announced a $1.8 billion investment in a grower following an almost $4 billion bet by Corona brewer Constellation Brands in August. Executives at Coca-Cola and Pepsi have said publicly they are closely watching how the business develops.
I say, they need us more than we need them.
“Wall Street’s very, very interested,” Tim Taggart, president of American Growth Fund, told the Wall Street Journal today.
Taggart manages the first cannabis-focused mutual fund. But his own experience shows how wary the cannabis industry should be of financial institutions. Even though his fund invests only in companies that “don’t touch the leaf” such as Scotts Miracle-Gro, his own corporate bank dumped him as a client.
The federal government still classifies marijuana as a “schedule 1” drug—the same category as heroin — and handling their finances can be seen as abetting crimes. Some smaller players are making the leap. “Two years ago, I couldn’t get any U.S. institutional money involved. Now they are 10% to 12% of our shareholder base,” he says Hadley Ford of cannabis operator iAnthus. He says interest among big U.S. institutional investors is a couple of years behind Canadian counterparts. Blue-blooded investment bank Lazard Freres acted as advisor to pot company Cronos when Altria bought its 45% stake….through its Canadian arm. And the biggest Banksters of all – giant blood-sucking squid, Goldman Sachs, advised Constellation Brands on its investment in Canopy Group but, as the target was Canadian, the bank couldn’t be accused of helping a client break federal law.
Its this kind of hypocrisy that characterises the industry at the moment. For some cannabis smokers, the involvement of Wall Street types is exactly what they need – to motivate them to kick the habit.