Wednesday, December 31, 2014


As we slip into another year of uncertain economic times in the markets I like to look back at what happened over the past year. The typical oil & gas plays were available to flip in and out of and mining profits were there but you had to be very selective and lucky I think to cash in on those micro moves. The sector that seemed to take the markets by a storm was the new marijuana market that I never thought could even exist. Yet here we are cheering on our favorite Canadian or US stocks that dabble in the sales and or production of marijuana. We like to call it medical marijuana so that we sound more sophisticated and less gangster. For years we all watched organized crime set up countless grow ops in the lower mainland of British Columbia for worldwide distribution and now we know why.

BC bud is the best, and the world wants it. The only problem has been a slow moving process of regulators in uncharted waters and its not getting better. The hopes of so many companies seem to hinge on a license that may never come even though millions have been poured into the application and readiness process.  The smart companies have hedged their bet by entering into the US market with its quick rise to fortune in so many states. It seems like a movement that cannot be stopped and the wealth from it could be unprecedented in our history.

The lesson learned is not a new one, yet so many companies and investors could not see through the pot smoke long enough to realize their ship had already run aground. I think too many companies focused on Canada. The very notion that a Health Canada license to grow would open the door to overnight wealth was laughable at the outset. Yet so many fell into the dream that may never come true. The supply and demand issues are only the start of the troubles. In Canada it seems the political worries of who may come into power and quash all these dreams is very real. The ones who already legally grow are not celebrating the sales and revenue numbers. This could all change but for now some have only been authorized to grow on a small percentage of their actual grow space. How is this even possible? The government approves some floor space and then waits weeks if not months to tell you the rest is good to grow?

The obvious snags are probably based on limited inspectors in a space no one thought would even be here today. As well it almost seems like the government doesn't want to dive right in just in case they change their minds in 2015 and scrap the whole thing. The US seems to have gone too far down this road to stop now and rather than fight the will of the people they are slowly bending and rewriting history. The medical support for marijuana is there and some of it is based on US and Canadian lab work itself. How can you call marijuana a schedule 1 drug when it has proven health benefits? Its almost as if the lobby groups themselves kept marijuana off the shelf the past half century due to a direct competition with the big pharmas.

I don't want to get into who is better or will have a better year in 2015 because I really think it's too early to tell who the big winners will be. I strongly feel that this is not a temporary trend in the markets though and marijuana will be stronger next year than we saw in 2014. You just have to make sure you dig deep into the story before making a move in or out of your favorite.

All the best in the new year.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.