cannabis, cannabis plant, cannabis products, cannabis sativa plants

Market Watch: Invest in marijuana? What are you smoking?

Basic Jane | June 21, 2023

The first government license in the United States to allow the scientific study of marijuana for its pharmaceutical profit potential became effective only a few weeks ago.
The Washington State Liquor & Cannabis Board announced it would issue “the state’s first license to produce, process and possess marijuana for research purposes.” As you might deduce from the name, a board that formerly regulated alcohol sales added marijuana regulation to its mandate after voters in Colorado and Washington legalized recreational use in November 2012.
Read: Hemp is now legal in the U.S., what does that mean for pot companies?
The vote produced a strange result. It became legal to puff the stuff, but it was still illegal to breed and scientifically study it. The problem is that the U.S. government regulates marijuana under the same drug classification as heroin, despite the fact that some form of recreational or medicinal marijuana is currently legal in 35 states (depending on who’s counting) and Canada. Washington state actually needed three years to build a legal permit structure that would work around the federal ban.
The rapid rise of marijuana legalization has created what some people call a bubble for marijuana stocks. It’s reminiscent of the dot-com craze in 1999. An even more apt analogy might be the 1880s, when the transportation miracle promised by newfangled cross-country railroads stoked a mania for profits. Both ended badly: U.S. stocks fell 50% in 2000–2002, after adjusting for inflation, and a quarter of all railroads were bankrupt by 1894.
(It’s often said that psychoactive drugs can transport you, although I wouldn’t have any knowledge of this personally, of course.

The graph above shows that one index of tradable marijuana stocks crashed 35% or more—twice—just in 2018. The Alternative Harvest ETF MJ, -3.35% started its life as a little-known index of Latin American stocks. Then it changed its focus on Dec. 26, 2017, to a pure play on marijuana stocks. Its price soared and then cratered, an effect of legalization headlines that came and went. Similar index funds, such as the Horizons Marijuana Life Sciences ETF HMMJ, -3.83% had similar crashes, although not on exactly the same dates.
Today, a dozen or so legal marijuana companies trade for wild valuations. The accounting firm PwC Canada last year studied 15 of the biggest in North America.
Most of the 15 firms are losing money by the mega-kilo. So the usual valuation measures, such as price/earnings ratio (P/E), PwC said, “are just short of meaningless.” Instead, the accountants were forced to divide each company’s “enterprise value”—roughly similar to its market cap plus net debt—by gross revenue, since profits were almost nonexistent.
After excluding the highest and lowest outliers, the average company’s enterprise value was 103times its revenues.
By comparison, Bank of America BAC, +3.41% has an enterprise value to revenue ratio of about 1.1. Apple’s AAPL, -0.13% is around 3.1.
Many well-known companies trade at prices that are rich. But some of the biggest cannabis firms’ EV/Revenue ratios, as calculated by PwC, are sky-high:
• Canopy Growth CGC, -12.17% : 128 times revenue
• Aurora Cannabis ACB, -5.08% : 133 times revenue
• Cronos Group CRON, -5.23% : 257 times revenue
Legal marijuana’s parallels to manias of the past are not lost on Shannon Vetto. She worked for 19 years at Russell Indexes. For the last six of those years, she was managing director of the division that produces the widely followed Russell 1000 RUI, -0.13%, Russell 2000 RUT, -0.74%, and many other benchmarks.
“People just started adding ‘cannabis’ to their names,” Vetto points out. That by itself made their stock prices shoot up. It’s an eerie echo of the way appending “.com” to a company in 1999 sent prices of that era into the stratosphere.
Vetto now runs SV Consulting in Mercer Island, Wash., and confers with many cannabis executives. “We know we’re in a bubble,” she says. “The peak of the indexed companies’ stock values occurred in January 2018. But all the news and all the hype came out in the summer of 2018, when the first plant-touching firm went public.”
That firm, which processes physical marijuana, was Tilray Inc. TLRY, -4.65%, based in British Columbia. It went public on Nasdaq in July 2018. In August of that year, Constellation Brands STZ, +0.56%, the maker of Corona and other beers, announced a $4 billion investment in Canopy Growth, sparking another round of buzz.
As an industry, it’s more dangerous than usual to invest in marijuana based on headlines. “If it hits the newspapers,” Vetto says, “it’s too late to get in.” Instead, the potential for life-changing pharmaceuticals—which could sell for big margins—is now the draw for early money.
“The unexplored value across all the uses of cannabis has never been researched,” Vetto says. “We only hear about THC [the psychoactive compound] and CBD [the pain and inflammation fighter]. There are more than 100 others.”
That brings us to the first company with a government license to actually breed and analyze cannabis. There are certainly many more research firms on the way. But Jessica Tonani, chief executive of pharma company Verda Bio in Seattle, has a head start on isolating miracle compounds formerly unknown to science (definitions provided by Green Relief of Canada):
• CBG: Possibly blocks cancer cells and protects nerves from Huntington’s disease
• THCV: May inhibit Alzheimer’s, reduce panic attacks, and suppress overeating
• CBN: Potentially fights antibiotic-resistant bacteria, burns, and psoriasis
Verda (the word means “green” in Esperanto) is a private company with only seven full-time employees, but it may wind up with bigger potential. Given the number of competitors, recreational marijuana may drift down to commodity pricing, since it grows like, well, a weed.
“I wouldn’t put a penny into recreational,” Vetto says. However, a buying crowd is piling in billions of dollars. Can the horde make a few cannabis companies’ stock prices soar even further? Sure. For example, any move at the U.S. federal level to accept state legalization could provide a short-term rally.
But with valuations as rich as they are today, you shouldn’t get too excited, unless you like watching your money go up in smoke.
https://www.marketwatch.com/story/invest-in-marijuana-what-are-you-smoking-2019-02-06

Previous Next

Frequently Asked Questions

Oral CBD Products

What makes Basic Jane oral products different from other CBD edibles?

Basic Jane oral products are developed out of one of the first state-licensed cannabis research programs in the U.S. Every formula is designed by scientists with a focus on real-world use, consistent dosing, and meaningful results. All oral products are THC-free — so you get the benefits of cannabinoids without any psychoactive effects or concerns about drug testing.

Do Basic Jane oral products contain THC?

No. All Basic Jane oral products are 100% THC-free and are legally sold under the 2018 Farm Bill. They will not get you high and are designed for clear-headed, everyday wellness.

Which oral product is best for general pain and inflammation relief?

It depends on what you need! CBD Mints are a great everyday starting point — low-dose, gentle, and appropriate for any time of day. For stronger inflammation relief, Boost Mints contain both CBD and CBDA (the raw form of CBD), which provides an added boost for more significant discomfort. Both work systemically, meaning they support your whole body — not just one area.

What is the difference between CBD Mints and Boost Mints?

CBD Mints contain 5 mg of CBD per mint — a perfect microdose for consistent, all-day support. Boost Mints contain both CBD and CBDA for extra inflammation relief. Think of CBD Mints as your everyday companion and Boost Mints as your go-to when you need more firepower — particularly after a tough workout, a flare-up, or a harder day.

What are Refresh Chews best for?

Refresh Chews contain CBD, CBG, and terpenes, making them ideal for people who want to power through their day with more clarity and ease. They are designed to help reduce anxiety, support focus and energy, and keep you feeling your best without any jittery side effects. Perfect for busy mornings or an afternoon pick-me-up.

What are Passion Chews and who are they designed for?

Passion Chews are designed specifically for women — particularly post-menopausal women — to help them feel present, connected, and in the moment when they want to. They are thoughtfully formulated with women's hormonal health in mind and designed to support intimacy and overall well-being.

What are Night Caps and are they CBD?

Night Caps are actually cannabinoid-free. Instead, they contain a blend of hops (Humulus lupulus) and valerian (Valeriana officinalis) — two botanicals with a long history of traditional use as natural sleep aids. They are non-habit-forming and designed to help you wind down, fall asleep, and wake up refreshed. A wonderful option for anyone who prefers to keep their sleep routine free of cannabinoids.

Which oral product is best for sleep?

Night Caps are Basic Jane's dedicated sleep product and are the first recommendation for anyone struggling to get a good night's rest. Their blend of hops and valerian is non-habit-forming and designed specifically for sleep support. If you are also managing pain that interferes with sleep, pairing Night Caps with a CBD Mint or Boost Mint may provide broader comfort going into bedtime.

Which oral product is best for daytime use?

CBD Mints are perfect for any time of day — subtle, low-dose, and easy to take on the go. Refresh Chews are a standout daytime choice if you want an added edge: the CBD/CBG and terpene blend is designed to keep anxiety at bay and help you feel energized and focused. Both are discreet, minty, and easy to incorporate into your daily routine.

Which oral product is best for workout recovery?

Boost Mints are a great post-workout choice. The combination of CBD and CBDA works systemically throughout the body to support inflammation relief and recovery. Take one to two mints after exercise and give them 30–90 minutes to build. For faster, localized muscle relief right after a workout, consider pairing with a Relieve Cream or Relieve Gel topically as well.

Can I use oral and topical products together?

Yes — and many customers do. Topicals like the Relieve Cream, Relieve Gel, and Pain Sprays target localized areas like sore knees, shoulders, or back, while oral products like CBD Mints and Boost Mints provide systemic, whole-body support. Using both together is one of the most effective approaches for people managing chronic or widespread discomfort.

How Oral CBD Works

How is oral CBD different from topical CBD?

Topical CBD products work locally — you apply them directly to the area of discomfort and they interact with receptors in the skin and underlying tissue. Oral products are absorbed through digestion and work systemically, supporting your whole body rather than one specific area. This makes oral products especially valuable for conditions that are more widespread, internal, or mood- and sleep-related.

How long does it take for oral CBD products to work?

Oral products typically take 30–90 minutes to take effect, depending on your metabolism and whether you have eaten recently. Plan accordingly — they are not a rapid-response product in the way topicals are, but their effects last significantly longer.

How long do the effects of oral CBD last?

Effects from oral CBD products typically last 6–8 hours, making them a great choice for consistent, long-lasting support throughout the day or night.

What is CBDA and why is it in Boost Mints?

CBDA is the raw, unheated form of CBD found in the hemp plant. Research suggests it may have potent anti-inflammatory properties, and when combined with CBD, the two cannabinoids may work synergistically for enhanced effect. That is why Boost Mints contain both — to deliver extra support beyond what CBD alone can provide.

What is CBG and why is it in Refresh Chews?

CBG (cannabigerol) is sometimes called the "mother cannabinoid" because it is the precursor to other cannabinoids. It is being studied for its potential to support mood, energy, and focus. In Refresh Chews, CBG is combined with CBD and terpenes to create a formula specifically designed to help you feel clear-headed, calm, and energized.

Activity and Timing

When is the best time to take CBD Mints?

CBD Mints are designed for any time of day. Many customers take one in the morning as part of their wellness routine, another mid-afternoon, or after activity for recovery. Because each mint is a low 5 mg dose, you can adjust timing and quantity to fit your lifestyle. Start with one and see how your body responds.

When is the best time to take Boost Mints?

Boost Mints are best taken when you need more targeted inflammation support — after exercise, during a flare-up, or when you know a more demanding day is ahead. Because they contain both CBD and CBDA, they are more potent than standard CBD Mints and are ideal when everyday support is not quite enough.

When should I take Night Caps?

Take Night Caps about 30–60 minutes before bed to give the hops and valerian time to take effect. They are designed to help you relax, fall asleep naturally, and stay asleep through the night.