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The following is a portion of a transcript of a recent
interview given by Minyanville Founder Todd Harrison. The
full interview will be made available shortly.
Can you provide a quick explanation of who you are, what
you've done, and what you are doing now?
My quick bio is
. That should save us some time. In terms of who I am,
that's a bit more involved but I would answer that I'm a husband,
step-dad, and father who has spent the last 14 years attempting to
effect positive change through financial understanding.
You made a strong statement about cannabis stocks being the
theme for the next 10 years. Can you expand on this?
Yes, that statement was made in December 2012, and we're seemingly
on our way. The thinking behind it -- that
cannabis was my single best investment theme for the next
-- is pretty straightforward. 1) Tax revenue: With recreational
sales taxed at a higher rate than medicinal sales, cash-strapped
states are incentivized to follow Colorado's lead. 2) Crime
reduction: Prisons are overcrowded and the system is clogged.
Mainly, this is a classic case of "follow the money," because a LOT
of people will get rich and the government wants its fair sh
How does the fact that these are mostly "
" come into your decision-making process?
It depends on how you look at it. There are a lot of good
ideas floating around and there is much to learn about the
industry. This is a time to educate ourselves about the
various applications and ancillaries, and identify profitable
pathways. This will be a long-tail investment theme in my
view; as with any investment, you have to do your homework.
With that said, and as a matter of course, I tend to steer clear of
penny stocks as the odds aren't in your favor as a small investor.
What about the conflicts of the promoters and those who are
unscrupulous having influence over these stocks? Any advice
on how to weed out (no pun intended) those who are legitimate vs.
those who are just set up for the hype and pump-and-dump?
For as long as there has been money and markets, there have been
people trying to manipulate them, and the truth is you can never
really know (see Enron, Madoff, 2008). What I can offer is
that right or wrong, institutional money won't invest at scale
until they're able to cover their own asses, which means research
coverage on Wall Street. I'm not saying that model works; I'm
just sharing what it is, and we're already seeing it take root with
). In time, there will be enough "green-chip" cannabis
companies to build a legitimate ETF and that will likely provide
some diversification for investing in the theme.
The SEC issued a warning recently regarding cannabis
stocks. What are your thoughts on this?
As well they should have. The average investor is at risk, perhaps
now more than ever -- this isn't specific to cannabis stocks but it
certainly includes them. The fact that the mainstream media is just
recently picking up on the legalization theme -- with specials on
CNN, CNBC, etc. -- and as it "clicks" in the mindset of the masses,
there is a natural inclination to profit from it. I think the SEC
did the right thing, because the temptation is certainly there to
dive in to the "new theme."
Are there any groups within the cannabis stock group that
you feel have greater potential to outlast others, and
I'm partial to the periphery vs. the growers. The latter has too
much regulatory risk -- it violates Federal law -- and by the time
growers achieve scale, corporate America, particularly big tobacco,
will bogart the space. Of course, some well-positioned
growers will be part of the consolidation, so that's good. I
think the food chain is a better, and relatively safer, bet.
Hydroponic products, vaporizers, even the edible space, that sort
of thing. And I think products or services that measure or
monitor the potency of particular cannabis products or strains will
While we're still early in the longer-term investment theme, we're
not in the first inning either. Much like the Y2K bubble and
bust, winners will emerge and flourish and others will be
toe-tagged and left for dead. It's worth remembering that
many of these stocks have already rallied upward of 1,000%, and one
should be smart about the allocation of speculative money as we
continue to educate ourselves on the space. Only invest what you
can afford to lose, and sync your time horizon with your risk
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