The cannabis industry was banking on the fact that recreational marijuana will be available in Canada early next year, but the comments of Bill Blair fling down all such hopes. He suggested that the government is in no hurry to establish legal marijuana in the country.
The companies dealing in the marijuana industry was expecting that the legislation will be introduced in spring this year and from next year onwards the business will be totally legal to operate in the country. The investors in the cannabis stock are always aware of the risk they take by making investments yet they were banking on it becoming legal for recreational purposes in Canada. This statement of Blair led to disappointment among the players who now feel that the bill won’t be introduced even by summer and the marijuana stocks went tumbling down.
The MJIC Canadian marijuana Index was down by 8% last Tuesday and the very next day it lost another 3% to end at 283. Such market moves are not uncommon for people dealing with these stocks and in fact they use such opportunities to make some good money. The owner of MarijuanaStocks.com, Jason Spatafora said, “Irrational exuberance works both ways with marijuana stocks, but as Warren Buffett says, ‘When there’s blood in the streets – buy.’”
Quoting Buffett, he advised the investors that if they have confidence in a particular company and investment then don’t deter if market sentiments are not favourable. He advised them not to leave money on the table but take profit home. It’s better to buy back again at a lower price when there is a correction. Again for him too, diversification is the key. He asked people to invest in companies that have a wide array of assets, so even if there are jolts in a particular asset it does not lead to total wealth erosion as other assets provide sufficient cushion to the investment.
Spatafora said that it is better to invest in those biotech companies that are in a process of developing drugs using a cannabis product as medicinal marijuana has more acceptance and even if the sector gets punched these companies are shielded.
He advised the investors not to get panicky and become buyers on days when most of the others are jumping off thinking it is a sinking ship.
