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Why cannabis stocks are not like cryptocurrencies

Daniel Roberts

Amid the wild ride for weed stocks like Tilray and Canopy Growth in the past month, many market pundits and financial advisors have adopted the popular take that cannabis stocks are like cryptocurrencies, and are in a bubble.

Former hedge fund manager Whitney Tilson said he’s advising clients to stay away from weed stocks and predicted that Tilray, “is going down 90%, I guarantee you, a year from now.” Investment advisor Lee Munson cautioned, “90% of them are frauds and just aren’t going to make it.” Kevin O’Leary of “Shark Tank” declared, “Never would I touch this.”

Eric Spitz, CEO of cannabis distributor C4 Distro & Trading, says they’re wrong.

“They’re wrong because it’s a consumable product—that is moving,” Spitz said on Yahoo Finance’s Morning Meeting show. “And when you consider the black, white, and gray markets, it’s already bigger than wine, it’s slightly smaller than booze, and it’s half the size of beer.”

(AFP Photo/Don MacKinnon)

Spitz also says that as the legal landscape for weed develops, on a state-by-state basis (a la sports betting law), certain logistical headaches will eventually improve, like the difficulty for cannabis companies to get business bank accounts, since it’s still illegal at the federal level. “You can find banks who are willing to strap in, meaning they have to do all the audit, all the compliance,” says Spitz. “It is not illegal for a bank to bank cannabis, it is just very difficult and costly.”

Finally, the stigma once associated with smoking marijuana is fading as the law evolves, Spitz argues. “I think what you see when you look at the polling data is most Americans under the age of 50 don’t care one iota about cannabis… The over-50s are the ones that need to be coerced and they do get a lot of solace knowing that it’s legal now. I think we are on a 20-year destigmatization path.”

Daniel Roberts is a senior writer at Yahoo Finance. Follow him on Twitter at @readDanwrite

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