The legal cannabis market hit $5.7 billion last year, prompting columnist Angelo Calvello to ask, “Should asset owners consider investing in cannabis?”
But there are some serious barriers to institutional investments in marijuana, Calvello writes in his column, including the size of the market (still small by asset-owner standards) and its questionable legality (cannabis is still technically illegal under federal law). Beyond these concerns, there just isn’t solid evidence yet that an investment would be worth the risk.
While little data is currently available on the potential investment performance of marijuana companies, more established ‘sin stock’ industries such as gambling and alcohol can be accessed through USA Mutuals’ VICEX fund. Compared to Vanguard’s socially responsible index, the fund is certainly less popular—but performance tells a different story. This is how allocations to vice fare against ethical investments.
All data as of July 12, 2016. Sources: ArcView Group, Park Street, Technavio Research, Morningstar; Infographic by Sam Syed