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NASDAQ of Pot Stocks Grows Money 1600% More Than S&P 500

Last Updated September 23, 2020 12:27 PM
W. E. Messamore
Last Updated September 23, 2020 12:27 PM

The biggest U.S. and Canadian marijuana stocks have been on a wild ride over the last two years, but their share prices are getting pretty high.

In October 2017, the Marijuana Index  (think of it as the NASDAQ of marijuana stocks) started growing like a weed from $113 on Oct 26, 2017 to $363 by Jan 23, 2018.

If you had invested in the S&P 500 in October 2017, then by last October, a year later, you had returns of 9.78% on the growth in those 500 company’s shares.

If you bought Big Weed, your shares produced 158% returns  over the same time period.

That’s a very impressive 16 times more returns from an investment in the 21st century cannabis industry via marijuana stocks than the main equities benchmark.

Between October of last year and now, growth in the Marijuana Index has been modest, though it has slightly outpaced the S&P 500’s growth during the same time frame.

Now That’s What I Call a Black Market

Marijuana Index
With the enormous retail sales volume of the legal marijuana industry in the United States in recent years, every Friday is Black Friday in the legal cannabis industry. | Source: Marijuana Index 

With the enormous retail sales volume of the legal marijuana industry in the United States in recent years, every Friday is Black Friday in the legal cannabis industry.

As Tom Adams, Arcview Market Research’s editor-in-chief, said  in 2017:

“The only consumer industry categories I’ve seen reach $5 billion in annual spending and then post anything like 25% compound annual growth in the next five years are cable television (19%) in the 1990’s and the broadband internet (29%) in the 2000’s.”

The stellar sales numbers have been corroborated by the oceanic tax receipts on these goods in the 32 states, plus D.C., where commerce in marijuana products is now legal.

Over the next decade, legal marijuana enterprises in the United States are projected  to create over a million new jobs and generate more than $132 billion in federal tax revenue alone.

Legal marijuana states are already raking  in billions in tax revenues.

This is an industry that has produced vast cash revenues that are almost without parallel in the growth phase of any industry in world history. And that’s despite remaining technically illegal under the prohibitions of the Nixon-era Controlled Substances Act.

No wonder confidence is so high – and marijuana stocks have performed so well.

Growth in Marijuana Stocks Reflect How Quickly and Dramatically Its Legal Status is Changing

The Boston Globe just reported  Tuesday that all 2020 presidential candidates support legalizing marijuana – “even the Republicans.”

That editorial dig at Republicans implies they are the most avid drug warriors of the two main parties in Washington, but the war on drugs, including marijuana, raged  on through all eight years of the Obama Administration.

Even though that president acknowledged as a candidate that when he was younger he “inhaled [smoke from marijuana] frequently. That was the point.”

Still, not only does the entire crowded field of Donald Trump’s 2020 election challengers support legalizing marijuana in the United States, but also the sitting president himself now does too.

He said last June he would throw his support support  behind congressional efforts to legalize marijuana at the federal level.

Several months later, Trump asked  for the resignation of then-Attorney General Jeff Sessions, who had an overtly hostile approach to marijuana legalization.

The sudden change of tune on marijuana from national politicians makes Washington a laggard in reforming U.S. drug policy, trailing behind 32 states and its own city’s government. And more states are poised  to follow the nearly three dozen states that have legalized marijuana.

Washington will also lag behind Ottawa, where the Canadian government made Canada the second nation to legalize marijuana in June of 2018.  (Uruguay was the first.)

Marijuana Industry: Growing…Like A Weed

Every day the burgeoning marijuana industry finds new partners and investors.

Today, Martha Stewart announced  a partnership with Marijuana Index-listed company, Canopy Growth, as a product development advisor for a line of CBD products for animal health. Canopy’s stock was trading 4.64% higher a couple hours after the news broke

That made Fortune 500 beer and wine company Constellation Brands’ $6 billion stake in Canopy Growth worth a quarter of a billion more in under 24 hours.

The volatility of a high-risk, high-reward, fast-growth business like the marijuana industry headed into the third decade of the 21st century is attractive to options traders. Last fall Barron’s Gunjan Banerji said :

“Think Marijuana Stocks Are Crazy? The Options Are Insane.”

While marijuana stocks are moving like cryptocurrencies, with volatility and a forceful upward momentum, the spot price of a pound of U.S.-grown cannabis remains very steady .