An expert weed investor explains what you can do to make cash money
Since the days of America’s first gold rush to North Carolina in 1799, merely the scent of opportunity to get rich quick inevitably gives rise to a pantheon of charlatans with promises of filling bank accounts until they overflow.
The unexpected and sudden legitimacy of cannabis is no different. With the growing mainstream acceptance comes a laundry list of “experts" willing to tell everyone how to jump on the gravy train of fast cash and easy money.
Jeff Siegel isn’t one of them. As a leading investment adviser in the emerging cannabis industry, Siegel doesn’t champion the idea that investing is easy and will generate immediate returns. “Anytime you invest in anything, whether it’s cannabis or not, become an expert,” he says. “Read everything you can, educate yourself about the market.”
In other words, do some work.
As the editor of Green Chip Stocks, Siegel has been giving investment advice to would-be cannabis entrepreneurs and prospectors since states first began toying with the idea of medical and adult use pot. But unlike so many who saw the opportunity in marijuana because they love marijuana, Siegel’s motivation was more global.
“Coming from Baltimore, I saw what the War on Drugs did to my community. So anything that I can do to help end the War on Drugs I am 100 percent down for,” he says. “And I think the legalization of cannabis is a step in that direction.” Then he goes deeper: “When I saw my friends coming back from the war all fucked up with PTSD, I saw how marijuana helped them.”
Siegel is unyielding on his position. “For the government to deny a sick person access to something that can help them ... especially a veteran who became sick because of their service to the government, that’s wrong. It’s a violation of human rights.”
To understand how Siegel arrived at this determination, rewind to all the way back to 1971 when then 8-year-old Jeffrey saw a PSA featuring Iron Eyes Cody stoically surveying the effects of pollution on a river as a tear escaped his wise and weary eye.
“I remember seeing that commercial and thinking, 'Why would you fuck up the river?'” he says.
His relentless focus on the environment wasn’t shared by his peers. He would chase after friends if they littered and say, “Hey, you’ve got to put that in the trash can.” As a result of his reminders, Siegel was shunned. “I wasn’t a cool kid,” he says. “I was the geeky, scrawny kid nobody wanted to be friends with. No girls would talk to me.”
Siegel would eventually find his voice in the punk rock scene in Washington D.C. during the ‘80s. The fact that hard-core punk was often focusing on political issues spoke to Siegel. “I discovered this music … and it just spoke to me,” he told HuffPo.
“The greatest thing about [punk rock] was not just the music,” he says. “Nobody liked this stuff, nobody cared about [what they were singing about], and they didn’t give a shit. [Artists] were doing it because they want to do it. They were doing it on their own terms.”
So began Siegel’s transformation from geek to chic. After college, the newly empowered Siegel landed a job as a financial writer and was later approached by a former coworker to contribute to a new financial website. “I wasn’t passionate about it,” he says. “I didn’t want to write about what everyone else was writing about; I wanted to write about socially responsible investing.”
“So, of course, some people were like, ‘Well, that’s the dumbest fucking idea I’ve ever heard,” he recalls. Drawing from his punk rock lessons, Siegel decided to do it anyway.
“I figured I’d give it six months, if it didn’t work, it was only six months.” Siegel’s experiment and his hope that others would share his vision of “Values-Based-Investing” worked.
His newsletter focuses on socially responsible companies providing products or services that benefit others and the planet. “Within a few months it was the most popular newsletter we offered,” he says. The first topics included solar and renewable energy as well as organic retail.
Armed with a sturdy education in investing, his lifelong commitment to the planet, an instinct for gauging public perception and a punk rock attitude, Siegel realized in the early days of marijuana legalization it was where he needed to focus his energy.
“We began in Canada and there was a lot of risk,” he recalls with an air of fondness. “Companies had a hard time raising capital and we didn’t know whether the government was going to come in and shut the whole operation down at any time.”
“In the U.S. we’re about where Canadian stocks were five years ago,” he says. But the risk isn’t necessarily the same. “Cannabis isn’t going anywhere, the cat’s out of the bag. I estimate it’ll be about three to five years before prohibition finally ends.”
Although that’s great for consumers, for small investors or entrepreneurs, it means the opportunity window is open for a very short time. “Once prohibition ends, the big companies who are already frothing at the mouth to get into the industry will wipe out most of the opportunities for the little guy,” he cautions.
Indeed, with companies like Philip Morris already applying for and being awarded cannabis related patents, once the last break-water is lifted, the wave that follows will certainly drown out the small time pioneers and innovators who are finding opportunity in the industry today.
SO WHERE CAN YOU START?
“There are some robust Canadian companies that are traded on the Toronto stock exchange — Canopy Growth (TSE: WEED) and Aphria, Inc., which trades under the symbol APH." Another he mentions is Organigram Holdings, which trades on the TSX -Venture under the symbol OGI.
Beware the cheap ones, however — they can come with huge rewards, but also huge risks. “When I look at a company I can buy for a buck, I ask, ‘Is it well funded and does is have a huge market presence?’’
“I’m also really focused on edibles,” he continues. “The margins have increased because the ingredients are cheap and the demand has increased. Technology is strong, companies like The Peak Beyond are going to change the retail experience because it’s interactive and new.”
The U.S. has some fertile markets Siegel is monitoring as well. “Massachusetts is a good market and so is Maryland. Florida is a fantastic market. It’s limping along but think about it, it has a ton of retirees and people who grew up in the ‘60s, so the potential for pain relief or casual use among retirees is amplified,” Siegel explains.
“Testing companies are going to become more lucrative, I like Steep Hill Labs,” he says. “Brands are also big, Willie’s Reserve or Leafs by Snoop are just the beginning.”
While these opportunities are turning up every day, when challenged to name one investment he’s excited about, Siegel bursts without hesitation: “Defonce Chocolatier!”
“It’s a high end San Francisco company that was started by a tech guy,” he says. “One of the challenges with edibles is there’s no consistency. The guy who founded this company wasn’t having it; he hired a mathematician to develop a formula, which would give you a consistent experience every time. He really went above and beyond,” Siegel says excitedly. “You will have the exact same experience every time, and I know because I’ve tried a lot of it.”
For research purposes, of course.
With new investors in mind, Siegel ends with this advice: “I encourage people to embrace the idea of investing alongside their values,” he says. “No one understands the idea of ethical investing more than I. I invest alongside my values, I have to support the mission of these companies, sure, but at the end of the day, they have to be profitable. That’s the whole point.”