“A few wealthy businessmen-not broad grassroots support-started and sustain the ‘medical’ marijuana and drug legalization movements in the U.S. Without their money and influence, the drug legalization movement would shrivel.” US DEA paper
4/3/14, "The misty world of marijuana stocks," BBC, Joe Miller
""One day, people are going to ask me how I became a millionaire," the Wolf tells me. "And I'm gonna say, 'From weed stock.'"
His online persona, the "Wolf of Weed Street", is a parody of Jordan Belfort, the corrupt New York stockbroker played by Leonardo DiCaprio in Martin Scorsese's recent blockbuster.
Though the Wolf considers Belfort's character a "scumbag", he likewise deals in stocks that sell for pennies rather than dollars, and that aren't big enough to list on major exchanges...
'Green rush'
The firms to which the Wolf gives his seal of approval are mostly riding the wave of recent legislation that decriminalised recreational use of the drug in the US states of Colorado and Washington.
In what's been dubbed a "green rush", investors have flocked to cash in on the new markets, causing stocks in cannabis companies to soar.
"I've made $515,000 (£312,000) so far," says the Wolf, who quit his job as a disaster consultant in December after barely six months of trading in marijuana stocks.
An index tracking the performance of marijuana industry stocks,
in which only companies with a minimum market value of $1m are allowed,
soared by 125% in February alone (although it has since declined
significantly).
Even firms providing security to cannabis farms and warehouses are in the mix.
'Dot bong' era
The movement in marijuana stocks has received attention beyond the #WolfPack too. Veteran financial advisers, such as Todd Harrison, have been betting on cannabis being the next big thing since as early as December 2012.
"It's the single best investment idea of the next decade," says Mr Harrison, who founded investment news website Minyanville after making his name at Morgan Stanley and as the leader of a $400m hedge fund.
He likens the growth in weed stocks to the boom in the internet-based companies of the late 1990s - and plenty of investors feel the same way.
"I get inquiries from soccer moms, who feel they missed the boat last time around," says the Wolf, who jokingly refers to the marijuana boom as the "dot bong" era.
But discerning the long-term winners and losers might prove just as difficult as in the 1990s. "There will be the Ciscos and Microsofts that emerge as winners," says Mr Harrison, referring to the dotcom survivors. "But not before some firms get their feet held to the fire."
Growing problems
Although Mr Harrison is a
cheerleader for the cannabis industry, he is "not a big fan" of many of
the penny stocks currently driving the investment boom.
Even the more stable and legitimate companies are struggling, having to convince banks, who fear drug racketeering charges, to take their cash.
The Wolf, who at one point lost 60% of his fortune in one day, is realistic about the instability of many of the companies in which he invests. "I've started to treat the whole sector like a giant game of Frogger," he says. "I ride the wave and then jump.
"Shorting is a problem," he adds, referring to a process by which investors dump borrowed stock that they think is going to decline, then buy it back at a reduced price.
Sites such as the Cannabis Financial Network (CFN), which offers in-depth analysis of marijuana firms, are in high demand. The consultancy says it identifies "legitimate companies that are well positioned" to do well in the new markets, and favours firms with a publicly demonstrated business model, who make most of their money through sales of medicinal marijuana.
Experts such as Alan Brochstein, a financial adviser who was an early adopter of marijuana portfolios, are also sought after by those looking for a foray into the foliage.
"I spent six months being negative - I saw a lot of shady business practices," says Mr Brochstein. "But there are newer and better companies now."
There are better investors too - most of Mr Brochstein's clients are "people who appreciate the long-term growth story, and don't partake in the herb", he insists.
Like the end of prohibition?
Ultimately, Mr Brochstein, and his fellow weed
stock enthusiasts, are betting on the marijuana market maturing soon,
and they may well be vindicated.
Tax revenues, which are much higher on recreational than medicinal marijuana, may also help the industry's legal battle.
Colorado netted an additional $2m (£1.2m) in taxes for January after decriminalising recreational cannabis on 1 January, while Washington state expects to bag $190m in revenue by 2019.
But whatever the pace of legislation, there is no doubt that attitudes to the potent plant are rapidly changing.
"It's no different to the end of prohibition," says Mr Harrison. "The stigma is starting to wear off.""
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After a 20 year campaign, billionaire Soros has succeeded in legitimizing marijuana:
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| George Soros |
"Those people are turning out to make the 2014 election cycle look much like the 2012 cycle in Colorado and Washington, state election records show.
• In Alaska, the grass-roots Campaign to Regulate Marijuana Like Alcohol has emerged with the help of funding from the Marijuana Policy Project, which gave the campaign its first big contribution of $210,000.
If history repeats itself, then a few months before the election in Alaska, the Drug Policy Action group, the political arm of Mr. Soros‘ Drug Policy Alliance, will start contributing hundreds of thousands of dollars to help fund a media blitz and drive voters to polls to help support the measure.
• In Oregon, New Approach Oregon has collected enough signatures to get a legalization initiative on the ballot and has cashed its first checks: $96,000 from Lewis before he died last year and $50,000 from Mr. Soros‘ Drug Policy Alliance, according to state election records.
• In Florida, Mr. Soros has teamed up with multimillionaire and Democratic fundraiser John Morgan to donate more than 80 percent of the money to get medical marijuana legalization on the ballot through its initiative “United for Care, People United for Medical Marijuana.”
Calls to Tim Morgan, John Morgan’s brother who is handling press inquiries, were not returned.
The Marijuana Policy Project and Mr. Soros‘ Drug Policy Alliance aim to support full legalization measures in 2016 in Arizona and California — where they have funded and won ballot initiatives for medical marijuana use — and in Massachusetts, Maine, Montana and Nevada, Mr. Tvert said.
The Marijuana Policy Project also is “focusing a lot of time and resources passing bills” in Delaware, Hawaii, Maryland, New Hampshire, Rhode Island and Vermont, where it considers legalized marijuana to be a realistic prospect in the next few years, he said.
‘Phony propaganda’
Mr. Soros also is putting money into studies that show economic benefits from marijuana legalization.
In Colorado, the Drug Policy Alliance helped bankroll the Colorado Center on Law and Policy’s study that found marijuana legalization could generate as much as $100 million in state revenue after five years. That research was widely considered to have influenced the election.
The ACLU also has penned studies supporting legalization, and the Marijuana Policy Project commonly cites these and Drug Policy Alliance research to argue its case for legal marijuana.
Calls and emails to ACLU headquarters in New York were not returned, but its website says that “removing criminal penalties for marijuana offenses will reduce the U.S. prison population and more effectively protect the public and promote public health.”
Last year, Mr. Soros, via donations from his Open Society Foundation and the Drug Policy Alliance, helped fund Uruguay’s effort to become the first country to legalize the commercialization of pot. He also offered to pay for a study to evaluate the ramifications of the experimental legislation, which he has said will reduce overall drug use and help fight illegal drug trade, according to news reports.
“There are addictive, harmful effects of smoking marijuana,” said Mr. Walters, citing studies by the federal government and organizations such as the American Medical Association. “The silliness of pop culture is pretending this isn’t a serious problem. Their entire message is built on phony propaganda that has been far too successful in the mainstream media.”
The Drug Enforcement Administration agrees, despite President Obama’s proclamations that marijuana is no worse than alcohol.
In the official “DEA Position on Marijuana” paper last April, the agency said marijuana has a “high potential for abuse, [and] has no accepted medicinal value in treatment in the U.S.” It also cited that “a few wealthy businessmen — not broad grassroots support — started and sustain the ‘medical’ marijuana and drug legalization movements in the U.S. Without their money and influence, the drug legalization movement would shrivel.”
Even Mr. Obama’s drug czar said the legalization of marijuana is dangerous.
“Young people are getting the wrong message from the medical marijuana legalization campaign,” drug czar Gil Kerlikowske said in December. “If it’s continued to be talked about as a benign substance that has no ill effects, we’re doing a great disservice to young people by giving them that message.”
But the message is being propagated by Mr. Soros and groups of his supporters who have created their own nonprofits and political action committees. Although these organizations appear on the surface to have no affiliation, closer examination shows all are linked through their personnel and cross-promotion.
Drug Policy Alliance President Ira Glasser is a former executive director of the ACLU. Marijuana Policy Project co-founders Rob Kampia, Chuck Thomas and Mike Kirshner originally worked at the National Organization for the Reform of Marijuana Laws, which hosts industry conferences attended and promoted by Drug Policy Alliance staff, and has a political action committee that donates to marijuana advocacy candidates.
The Marijuana Policy Project’s co-founders also frequently speak at events sponsored by the Drug Policy Alliance. The National Cannabis Industry Association — known as the chamber of commerce for marijuana — was co-founded by Aaron Smith, who previously worked at Safe Access Now, another Soros-backed nonprofit that promotes the legalization of pot.
After 20 years trying to influence policy, Mr. Soros‘ army is winning the marijuana debate. Last year, for the first time in four decades of polling, the Pew Research Center found that more than half of Americans support legalizing marijuana, compared with 30 percent in 2000. Lawmakers are following suit, with an unprecedented number of legalization bills brought to the floors of state legislatures.
“It’s only a matter of time before marijuana is legalized under federal law,” said Tom Angell, founder and chairman of the Marijuana Majority, an advocacy group based in Washington, D.C. “We now have 20 states plus the District of Columbia with medical marijuana laws, two states have already legalized it for all adults over the age of 21 — politicians will have to follow the will of the people on this.”
Or follow Mr. Soros‘ money. Mr. Angell’s group is funded, in part, by a grant from the Drug Policy Alliance."
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