Cannabis: Medicinal, euphoric, a worthy—if unusual—investment
Cannabis has been around for thousands of years, but only now, with the relaxing of laws surrounding the plant, has it become a hot commodity in the US.
Today we’ll take a look at how this plant went from a medicinal staple, to being outlawed as well as its recreational resurgence in the 1960’s. But most of all, we’ll dive into how cannabis made it onto the stock market and why now—more than ever—it’s worth considering as an alternative investment.
Remember: All investing involves risk. The content of the podcast is for informational purposes only and is not investment advice. Please always use caution and diversify.
Hello and welcome to the 26th episode of Alternative Investing. I’m your host, Trevor Kraus Communications Manager at MyConstant.
It’s been since early November since I had my last podcast. As I mentioned before, the frequency of my podcasts has decreased from every other week, to every other two weeks.
I want this podcast to touch up on relevant stories that are happening with crypto or in the alternative investment world. To do this, sometimes you need to let some time elapse.
For those of you who don’t know, I’m American but I live in Saigon, Vietnam for work. A great deal of MyConstant’s back end is done here. So, to bring you all up to speed (and I promise this is relevant to our topic) I’ve been living here since 2014.
Despite me living 10,000 miles from my place of birth, we’re an interconnected world and much like the rest of you I do my best to stay on top of current events but sometimes things fly right under my radar. Much like today’s topic: cannabis. And yes, I’m calling it cannabis. It’s the oficial, scientific word for the plant.
The increased legalization of cannabis (or marjuana) in the US and the ability to invest in it hasn’t been on my radar, probably because I’m just not a cannabis kinda guy. I’ve tried it many times in different forms and it usually just makes me lethargic, giggly or gives me severe dry mouth. I understand why people enjoy it recreationally or for medicinal purposes, but it’s just not for me. Nevertheless, it’s now a viable investment.
When I came back to the US, I was over my friend Laura’s house for a pre-Thanksgiving dinner and we got to talking about investments and out the gate she started asking me about cannabis and what I thought about it as an alternative investment. And I was blank—I knew almost nothing. So I went home and started doing research and low and behold since 2018, you could invest in cannabis.
This podcast is particularly interesting for me because cannabis has had such a wild ride from where it started to where it went and to where it is today. Not just from an investment standpoint, but societal too. I’ll admit, when I pitched this podcast idea to Chris, I wasn’t sure if it was still too edgy of a topic to discuss.
So today we’ll discuss some of the history of cannabis in the US. How it went from a medicinal plant to a prohibited drug that was frequently mentioned in the D.A.R.E. classes across most schools to gaining acceptance for its medicinal properties, all the way up to where we are today. I’ll of course discuss some of the ways you can invest in cannabis right now and where “experts” see it going.
As with most plants that are known for their medicinal qualities, cannabis has been around for a long, long time.
Medicinal use of cannabis dates back at least 5,000 years, as such cannabis history is tied to many iconic time periods. Cannabis was said to have been an ingredient in a holy anointing oil referenced in the original Hebrew version of Exodus. The Ancient Egyptians reportedly used cannabis to treat glaucoma as well as general inflammation. Chinese Emperor Fu Hsi called cannabis a popular medicine in 2,900 BC, and at that time the Chinese had identified more than 100 medicinal uses for cannabis.
In 1,000 BC, the people in modern day India created a drink called bhang, a mixture of cannabis, milk, and other ingredients, and used it as an anti-phlegmatic and anesthetic. This drink is still used in India today. Ancient Indians may have also used cannabis as a purported cure for leprosy and dysentery as well as to cure fever, encourage sleep, and improve judgment and cognition. It was also thought to prolong life.
You can look up online pictures of a small buddha statue holding a joint sitting next to cannabis tea. Cannabis, or as people in India call it, ghanja—also has a long history of spiritual use in India. It is said that the Hindu god Shiva rested under a cannabis plant and ate its leaves following a family argument.
Shiva is referred to as the Lord of Bhang. The Vedas, a collection of ancient scriptures, refer to cannabis as an herb to release people from anxiety. One story in the Vedas describes a drop of heavenly nectar falling on the earth and becoming the cannabis plant.
Other ancient cultures also used cannabis. The Ancient Greeks used it for inflammation, earaches, and swelling. In his Histories, Greek historian Herodotus described cannabis being smoked for spiritual, emotional, and sometimes recreational purposes. He discussed groups coming together and smoking, stating that the people smoking cannabis would “howl with pleasure.”
Ancianet Roman medical texts listed cannabis as a cure for earache and as a way to suppress sexual desire. The Romans also boiled the roots of the plant and used them as a treatment for gout, arthritis, and generalized pain. People in modern day Arabia used it from 800 AD to 900 AD for migraines, pain, and syphilis, and insomnia.
So when exactly did cannabis go from medicinal to bad?
Well, at least in the US, up until the 1930’s the hemp plant—which is where cannabis comes from–was used for the same medicinal purposes that I just stated. In particular for pain and muscle spasms.
According to my research, around this time, people in Mexico began using cannabis for recreational use. This was to treat no illness, just to relax and hang with your friends.
Concurrently, the US was in the Great Depression and there was an influx of Mexican immigrants into the US and many people locally and in government positions were not happy about this. They felt that the economy is in shambles and immigrants are coming to “steal the jobs.”
So to neutralize or to demonize this Mexican migration, officials started to play up this negative smear campaign on cannabis. One of the campaign logos was called the “Mexican Menace.”
This smear campaign is why I’m calling it cannabis, not by its other more popular name—marajuana.
When this negativity towards the Mexicans started to brew, politicians in the US wanted to connect cannabis to Mexico as much as possible. So they began calling it by its Spanish name—marajuana. Doing this made it seem like this plant which was used world over for thousands of years was suddenly terrible and that only people in Mexico used and wanted to bring to the US and destroy society in some way. It’s incredible how these sorts of campaigns go in cycles.
This ties into the reason why I’m referring to cannabis by its scientific name. Marijuana was specifically used as a pejorative.
In 1936 there was even a movie released called, “Reefer Madness”. In case you don’t know, reefer is when you roll cannabis into a cigarette form. Anyway, the movie connected cannabis use to violence, rape, suicide and psychosis. Looking at it now, it’s laughable, but nearly 100 years ago, people gobbled it up in droves.
By the early 1940’s any medicine that had cannabis as an ingredient was heavily taxed and by 1944, cannabis was discredited by the medical community as having no medicinal use. Then, by the 50’s, cannabis was a drug that was punishable with jail time if you were found dealing or using it.
Despite nearly two decades of demonizing cannabis, this psychoactive drug really hit its stride in the late 1960’s with the hippies and counterculture generation. But why did Cannabis become so popular in the 60’s? Well for a few reasons. Let me explain.
In the Fall of 1962, the United States and its Cold War enemy, the Soviet Union, went face to face and the world held its breath. Historian Arthur Schlesinger described the Cuban Missile Crisis as the most dangerous moment in history. The turn of a key could have triggered nuclear war and the extinction of mankind. The whole thing seemed suicidal, completely absurd. Those who came of age during these anxious times made their stand not only as a “lost generation” but also as potentially the last generation.
President John F. Kennedy was assassinated 13 months after the Cuban Missile Crisis. These shocking events traumatized the nation’s psyche. It’s not coincidental that within a year after the JFK assassination, smoking marijuana, an herb that can facilitate the extinction of traumatic memories, would increase hugely among white middle-class youth, including some of America’s best and brightest college students. And now that the genie was out of the bottle there was no way to put it back in.
Contrary to rampant scare stories about devious pushers and deviant youth, It didn’t turn young people into miserable junkies or psychos or couch potatoes. More often than not it relaxed them and made them laugh or gave them the munchies (something I’ve experienced before). And it also set their skeptical minds in motion: If government officials lie about marijuana, what else do they lie about? If marijuana prohibition is based on blatant falsehoods, are other policies just as arbitrary, capricious, and without ground?
Not surprisingly, marijuana smokers in the mid-1960s tended to harbor anti establishment attitudes. It wasn’t the chemical composition of the herb that created skepticism toward government in general — it was the chasm between irrefutable lived experience and the government’s rabid antimarijuana mythology enshrined in federal legislation that mandated five years in prison for possessing a nickel bag of cannabis.
Cannabis’s status as a forbidden substance added to its allure. But it doesn’t explain the herb’s enduring popularity since 1964. That was when white America discovered pot and “marijuana” became a household word. This unexpected development was reflected in news stories with headlines such as “Dope Invades the Suburbs” and “The College Drug Scene.” What the magazines called “drug abuse” was almost entirely a matter of young people smoking weed.
1964 was also the year that President Lyndon Johnson’s Advisory Commission on Narcotics and Drug Abuse issued a report about mood-changing meds in America. The commission noted that “the rarest or most abnormal form of behavior is not to take any mind-altering drugs at all. Most adult Americans are users of drugs, many are frequent users of a wide variety of them.”
At this time physicians routinely prescribed Valium, Librium, Miltown, and other highly addictive hypnotics and tranquilizers — known as “dolls” in mainstream happy-speak — along with many other of uppers and diet pills to help Mom and Dad get through the day and fall asleep at night. These substances were often misused. Overconsumption of alcoholic beverages was even more commonplace.
Post-world-war-two Baby Boomers were the first demographic to smoke marijuana en masse. In the 1960s, few people were thinking about marijuana as a medicine. But the controversial plant may have had an unacknowledged therapeutic impact during that turbulent decade.
Beyond that, for fixties youth, cannabis was like catnip for a cat, a poorly understood but nonetheless efficient herbal means of navigating the anxiety and frenetic complexity of modern life. “The need to self-medicate symptoms of adolescent angst is much more important than simple youthful hedonism.
Adopted as a safe, effective, and medically unsupervised anti anxiety medications by legions of Baby Boomers, marijuana became the central focus of a deceitful and disastrous war on drugs launched by Richard Nixon. The drug war that Nixon set in motion in the early 1970s would escalate and metastasize under Ronald Reagan and his Oval Office successors.
Ironically, it was President Reagan who unintentionally shed light on the scientific basis of cannabis therapeutics when he expanded and militarized the war on drugs in the 1980s.
The Reagan administration poured tens of millions of dollars into research that would prove once and for all that cannabis damages the brain—or so it was thought. But rather than showing that cannabis caused brain damage, the Reagan administration underwrote a series of experiments that led to the discovery of “the endocannabinoid system,” which actually protects the brain and buffers stress when activated by cannabis components.
This major scientific breakthrough would have significant implications for nearly every area of medical science. It opened up new vistas of understanding human biology and went a long way toward explaining how and why cannabis is such a multifaceted medicinal herb — and why it’s the most popular illegal substance on the planet.
The emergence of cannabis as the drug of choice among tense teens and anxious adults in the 1960s and its durable popularity makes sense in light of scientific studies, which have documented how cannabis “turns on” receptors in the brain and body that regulate our ability to adapt to stress.
On a cellular level, stress is the body’s response to any stimulus that creates a physiological demand on it. When a person is stressed, the brain generates cortisol and other steroid hormones, which, in turn, trigger the release of naturally occurring cannabis-like compounds that are produced in the human brain and body.
These endogenous “cannabinoids” bind to cell receptors that restore physiological homeostasis by down-regulating the production of stress hormones. Marijuana, an herbal adaptogen, essentially does the same thing: When consumed in moderation it can calm overactive nerves, relax musculature, lower blood pressure, and ease acute and post-traumatic stress.
Stress is unavoidable in daily life. Whereas activation of the body’s innate stress response (“fight or flight”) is essential for responding to acute survival threats, too much stress can increase one’s susceptibility to disease and damage an organism in the long run.
Chronically elevated stress levels boost anxiety and hasten the progression of Alzheimer’s dementia. Emotional stress has been shown to accelerate the spread of cancer. Stress alters how we assimilate fats and other nutrients.
I went off on a bit of a rabbit trail here, but I think the bottom line is that cannabis is not the horrible, crazy drug that the US and other governments tried to make it out to be.
During the 1980’s and 1990’s school programs tried to link cannabis use to hardcore drugs. They talked about it as a “gateway drug.” If you did cannabis you were going to do heroin, cocaine or some other illicit substance and it never caught on.
I remember being in the 8th grade in the late 90’s and students doing reports on why cannabis should be legalized. At some point when you have 14 year olds outlining why something should be legalized, you have to know that your narrative has gone off the rails.
As a little side note, many people claim that cannabis in the 1960’s was less potent than it is today. Personally, I don’t know if that’s true. And there’s not a consensus about it. But it is a talking point of anti-cannabis legalization proponents.
Today, In the United States, the non-medical use of cannabis is legalized in 18 states and decriminalized in 13 states as of June 2021. In the beginning, most of the legalization was for medical use. You’d need a card from a doctor verifying your medical need. That was in the mid-1990’s. In 2012, Washington state and Vermont were to first two states to allow cannabis use for recreation.
I think in large part this legalization and decriminalization stems from the countless people who were and in some cases still are arrested for drug offenses that include cannabis. I think the general US opinion on this particular controlled substance has changed dramatically over the years and is no longer the wild, “reefer madness” drug that it once was.
On July 19, 2018, the first cannabis IPO in the United States—Canadian company Tilray (TLRY) – Get Tilray, Inc. Report—began trading at $23 on the Nasdaq.
Since its IPO, Tilray shares have been nothing short of a roller coaster—with shares hitting highs of nearly $300 in a trading session earlier this week.
Right now, investing in cannabis is shaky—at best. Even in the US, the acceptance and understanding of cannabis laws—um, people aren’t on the same page and things different from state to state. I think until cannabis is completely legalized and treated like alcohol, it’s going to see volatility.
Right now, you can invest in the marijuana industry by purchasing the stock of the companies within it. The companies that operate in the cannabis industry generally fall into three categories:
Cannabis growers and retailers
Ancillary product and service providers
Marijuana-focused biotechnology companies
The process of investing in cannabis stocks is largely the same as any other industry. These stocks trade on U.S. stock exchanges like the Nasdaq, and you can buy and sell them through any major brokerage firm.
Before investing in general, it’s important to do research. This includes cannabis stock. First, look at the company’s financial performance since it went public. You can compare its performance to that of its competitors. Another way to analyze the company’s financial performance is by reviewing the financial statements it has filed with the Securities and Exchange Commission.
As with any niche or alternative investment, personal finance experts recommend limiting cannabis stocks to a small percentage of your overall portfolio. Many experts suggest having a max of 5% of your investment portfolio in alternative assets such as cannabis. The rest should be kept in broad, diversified index funds.
There are literally hundreds of marijuana stocks to choose from in 2021. As we mentioned, cannabis companies can fall into several categories, including growers & retailers, ancillary product & service providers, and marijuana biotech companies.
Some of the top cannabis stocks on the market today include:
Curaleaf Holdings (CURLF)
Canopy Growth Corporation (CGC)
Green Thumb Industries (GTBIF)
And Tilray (TLRY)
In addition to some of the newer cannabis companies in the industry, there are also companies that have been around far longer that have joined the industry. In fact, there are probably some names you recognize on the list. Such as Anheuser-Busch (BUD).
On the other hand, rather than investing in individual stocks, you can also add cannabis exchange-traded funds (ETFs) to your portfolio. An ETF is a pooled investment that takes the money from many investors and uses it to buy many different stocks. When you invest in an ETF, you essentially invest in all the stocks within the fund.
That being said, cannabis ETFs aren’t without risk. Companies in any emerging industry face higher volatility and potential to fail, so you, the investor, need to prepare accordingly. You should also check the expense ratio of any fund before investing, since industry-specific ETFs may charge relatively high fees.
As with any investment, someone considering investing in marijuana stocks should do their research and consider why the investment would make a good addition to their portfolio. It’s important to do your due diligence and understand the risk of this new industry.
As with any investment, If you’re considering investing in cannabis stocks or ETFs, make sure you have your other financial ducks in a row first.
Once you’ve prioritized your savings and other more stable investments, then you can start adding cannabis to a small portion of your portfolio. But given the industry’s volatility, be sure you’re only investing money you can afford to lose. I’m a broken record with that saying, but it’s true.
I’m going to wrap up today’s podcast here. I don’t want to overload you with information. But overall, when I do this podcast I try to bring you unusual investments that might not be on your radar. Right now cannabis is in its
infancy but in 5 or 10 years I think things will stabilize and it might not be this “strange” alternative investment.
Thank You for listening today. If you have any questions or comments about the podcast feel free to drop me an email at [email protected].
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