Ever since Canada legalized recreational marijuana earlier this month, a lot of attention has been focused on the financial potential of the new industry.
Most recently, this was the topic of discussion on Yahoo Finance Market Movers. On the show, Kevin O’Leary, well-known investor and co-host of the TV show “Shark Tank,” said he would never invest in cannabis—at least not right now.
“Mr. Wonderful” Says No To Cannabis Investing
Most pointedly, O’Leary was asked if he would invest in Canada’s legal weed industry. His answer was equally pointed:
“Never would I touch this. Never,” he said.
When pressed for more explanation, O’Leary focused primarily on the legal status of cannabis in the United States. Although weed is now legal in Canada, it is illegal in the U.S. And this is a big concern for O’Leary.
“You have to think about it long term,” he said. “As an institutional investor, I can’t touch this space. And I don’t because it is a Schedule I narcotic. Even cocaine is not a Schedule I narcotic.”
He added: “When you invest in a Schedule I narcotic, you are at risk to breach the RICO statutes of aiding and abetting the transfer of a Schedule I narcotic across state lines.”
O’Leary’s Advice for Legal Weed Industry
Simply put, weed is still too risky for O’Leary. But this might not be the full picture. From the sounds of things, there could be certain situations where he might be more open to investing in the space. Not surprisingly, it all has to do with weed’s legal standing.
In fact, O’Leary offered some general advice for what he thinks the legal weed industry should do to invite more investment. In particular, he said the industry should focus on CBD.
More specifically, O’Leary advocated for a distinct split between medical and recreational weed. In his vision, the medical industry should be focused on CBD. And it should have nothing to do with recreational weed.
On the other hand, the recreational industry could do what it wanted with THC and with the psychotropic aspects of cannabis.
O’Leary said that there is a lot of interest in using CBD as a medical product. He said it’s a massive market, possibly 10 times larger than the recreational market.
But, he argued, the recreational, THC side of things ends of getting in the way. In fact, he went so far as to call anything besides medical CBD “just noise.”
Cannabis Could Be Attractive for Certain Investors
It could be important to note that O’Leary’s comments were coming from the specific perspective of an “institutional investor.” He himself consistently stressed that.
And while O’Leary didn’t comment on how cannabis might affect other types of investors, it seems that there could be more opportunities for different types of investors.
In fact, the Canadian cannabis industry has been seeing some explosive growth recently by investors. Most notably, Tilray shares recently jumped by 500 percent. Similarly, shares in Canopy Growth Corporation have increased in value by more than 95 percent this year.