Your Special 4/20 Newsletter: Medicinal Stocks

v2 420A friend’s mother once asked me and my man what would be a good cannabis company to invest in as she wanted to buy stocks of that sort. This question caught us off guard–it was almost as if this sweet retiree was asking us where she could get good weed. She clarified that she wanted to invest in a company that was mainly in the business of medicinal cannabis. Oh medicinal! But of course. Her interest came about after Colorado and Washington legalized marijuana use. T
his is actually a question I get asked a lot as more people anticipate widespread legalization. I’m sure many other stock investors are asked about cannabis companies frequently, or at least from time to time (right?). For any new and exciting industry, who doesn’t want to profit from getting in early? With all the talk of legalization in Canada, the stigma of marijuana’s medicinal and recreational use will fade, or at least its reputation will be less shady. If and when this happens, you’re better off having seized such opportunities sooner than after the industry has boomed and the stocks have become more expensive.

The research we conducted for ‘Ma’ was actually difficult because many of these cannabis companies looked similar to one another. Many of them were a bunch of small businesses that came together to form a larger company; many outlined plans to dominate all corners of the cannabis market from production and retail to medicinal research and pharmaceutical use; most were quite new in the stock market; the stock prices were cheap and in similar price ranges; and they all promised expansive growth–in both the corporate and hydroponic sense. There is typically more speculation with younger companies; what’s interesting is that many of these cannabis companies are in a newer and developing industry that is slowly gaining acceptance and becoming incrementally less illegal.

As one who looks at a lot of stocks, I am always suspicious of hype and headlines. This is because I often find that by the time the news gets announced, it’s too late–the best buying opportunity has passed. Before I buy any stock, I like to look for clues first within the sector and the economy. Is the hype over? Is there an important upcoming meeting or announcement by the government that will affect this sector? Is the sector more stable and less volatile than the overall stock market? Or is the sector overheated and likely going to experience a bit of a sell-off? Will a company be announcing its quarterly earnings soon? I consider these things in addition to checking out a company’s fundamentals that point to a solid foundation, such as healthy financial data, plans for future expansion, and developments in products and services. Then I check if a company’s stock price has stabilized and I try to anticipate what might be a good price to get shares at in the near future. 

There are many cannabis companies in Canada. I took a look at some companies that trade on the TSX Venture Exchange (the stock exchange for newer and smaller Canadian companies):

Canopy Growth Corporation | Ticker symbol CGC.V | Price per share at today’s open: $2.60

Aphria Incorporated | APH.V | $1.56

OrganiGram | OGI.V | $1.10

Mettrum Health | MT. V | $1.66

Emerald Health Botanicals | EMH.V | $ 0.17 

I’ve got my eye on a couple of these companies. I won’t buy too many shares, I don’t want to risk much, but like Ma, I don’t want to miss out either. I’m willing to risk a bit of money to hopefully enjoy significant gains later. Before the end of the trading day today, on this celebrated date of 4/20, I will probably buy my shares of legalized cannabis. 

What 507 Days of No Shopping Can Do

For so long I got by with a minimal wardrobe consisting of basics, all of which could fit into a box. Everything I bought involved a minimum of two-weeks’ meditation where I considered an item’s durability, versatility, and impact on my budget. I can sew, so anything that got a hole or a tear was tended to with some mending, gentle handwashing, and TLC. Life in my 20s was eventful, full of travel and soul-searching adventure–I didn’t need or want a lot of physical baggage to weigh me down or distract me.

RackAs I hit age 30, I went down a different path. Until this day, I’m not entirely sure of the forces that affected me subconsciously, but it was likely a combination of a toxic relationship, major family problems, a lack of ambition, no big goals to save for, greed, and pure vanity–I don’t know why exactly, but I started to shop for clothes at an addictive level. Filling up bags at thrift shops and sales racks was so fun and only put a small dent in my monthly savings; this practice was enough to fuel an insatiable habit that got increasingly worse. Getting compliments on my fashion choices validated my actions and provided me with the justification to keep going, and even attain more expensive pieces. I should also mention that my level of going out for food and drinks was in-step with this out-of-control shopping.

I think at some point everyone gets a wake-up call. My wake-up call was a more of a long, sobering conversation that lasted for a couple of years. There was no question that I had to make some fundamental changes in my life. Every day I woke up feeling this deep, internal groan; I reluctantly plodded along, knowing some much-needed introspection was in order. My wake-up call was also doled out in punishing stages, much like the ancient plagues but on a smaller scale and onto one person. I found myself suddenly single and, for the first time in my working life, in some debt. This new situation was later accompanied by a bed bug invasion, personal tragedies, and chronic back pain that forced me into medical leave. In this succession of messes, I had one thing going for me: my investments were all still in tact and my portfolio was doing well.

During this extensive transition, I started to think about what I really wanted to do for the next phase of my life. I knew that I wanted to be my own boss and I entertained the idea of having my own business. I had the great fortune of meeting an awesome guy, JP, who eventually became my forever man. He too shared an interest in becoming some kind of entrepreneur. Inspired by the new prospect of becoming bar owners, we took courses in business. With my new ambitions, I wanted people to take me seriously. Then I realized I had to take me seriously. I shopped less frequently, but I was still being ridiculous with my money. So I vowed to not shop for clothes, bags, or shoes–not even socks or undies–for a year. In my old life, I had lived simply on much less for so long, that I knew I could do it. My rules still allowed me to receive unsolicited clothing gifts, I just couldn’t buy anything for myself.

Here are some unexpected things that happened the year I didn’t shop:

  • I worked out at the gym more and healed my back
  • I further downsized my wardrobe and belongings
  • Friends who knew about my vow were inspired to downsize too. They gave me their unwanted clothes–next thing you know, we were all clothes-swapping with each other
  • More money in, much less money out
  • I managed to go down to working part-time so that I could focus on learning more about investing and trading stocks
  • At the end of the year, I decided to continue with my vow for another four and a half months (507 days in total) until alas, all my clothing essentials morphed into shapeless mesh
  • I quit my job and had a great semi-retirement party
  • Untethered by work and other obligations, my man and I started to think about moving eastward to a better time zone to trade stocks at a more decent hour

It has been six years since my shopping fast ended. Those urges to shop still come and go, but I can observe these impulses with distance and objectivity. I still have plenty of clothes, but what’s most important is that I’m very content living with what I have. I only get things as I need to or when I really want to, which is a couple of times a year. Now, when I’m in a store I think about how the business is run, how much foot traffic it gets, how they display, price, and merchandise, how well it’s managed, and how happy the employees are. And of course, I exercise my new habit: I check if the store’s company trades on the stock exchanges, and if so, I look up the ticker symbol, the stock price, and how it performs against other retailers in the same sector.