Breaking bad: An investment in cannabis

Weisskopf, Jean‐Philippe

doi:10.1016/j.frl.2019.05.019

Cited by 18 publications

(17 citation statements)

References 24 publications

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“…Overall, clearly the Canadian listed cannabis industry equities portfolio experienced higher return and risk when matched to the stock market portfolio. Also, the capital asset pricing model (market model version) alpha and beta metrics in tables 1 and 2 strongly support the hypothesis that Canadian listed cannabis stocks as a whole have a high degree of systematic risk, as evidenced by the beta of 2.990214 and 3.697835 for All Stocks (1996( -2020( ) and 20+ Stocks (2011( -2020, respectively. Further, the alphas are large at 0.193243 and 0.143663 for All Stocks and 20 + Stocks, respectively.…”

Section: Resultssupporting

confidence: 61%

The Performance of Canadian Listed Cannabis Equities: 1996-2020

Cox¹,

Cheng²

2021

IBR

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This research investigates the investment performance of Canadian listed cannabis stocks. Canada legalized medical marijuana in 2001, following the initiation of medical marijuana authorization by some states in the US starting in 1996, and completely approved cannabis products in 2018. Investing in the 89 Canadian cannabis equities (listed on the Toronto Stock Exchange, Canadian Securities Exchange, Toronto Venture Stock Exchange, and Over-the-Counter Market) as an industry portfolio, based on weekly returns for the 1996 to 2020 period, generated high mean returns, standard deviation, positive skewness, and kurtosis. Robustness tests taking the winsorised returns (deleting the top and bottom 10 percent of returns) produced qualitatively similar results. Further, both the portfolio alpha and beta were extremely high. More so, the Canadian cannabis portfolio garnered excess returns when compared to the Standard and Poor’s Toronto Stock Exchange Composite Index. Money managers, financial analysts, and investors should contemplate including Canadian listed  cannabis stocks based on their high investment return. 

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Section: Resultssupporting

confidence: 61%

The Performance of Canadian Listed Cannabis Equities: 1996-2020

Cox¹,

Cheng²

2021

IBR

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“…It is believed that the two are connected (Higgins, 2018). Even though marijuana is now legal in many territories, some consider its producers to be "sin stocks" (Blitz and Fabozzi, 2017;Weisskopf, 2020). Sex differences in attitudes towards controversial companies might also affect "sin bond" prices (Fabozzi et al, 2019).…”

Section: Discussionmentioning

confidence: 99%

“…"Sin" stocks are public companies that engage in socially or morally objectionable activities (Luo and Balvers, 2017). While earlier the list of sin stocks was limited to companies involved in the production of alcohol, tobacco or gambling (the "triumvirate of sin"), now the list is longer and includes, for example, companies involved in the production of meat, fast-food, embryonic stem cells, marijuana or coal (Fabozzi et al, 2019;Trinks et al, 2018;Trinks and Scholtens, 2017;Weisskopf, 2020). A company can also be considered a "sinner" if it itself, or even its CEO, engages in acts of socially irresponsible behavior.…”

Section: Introductionmentioning

confidence: 99%

Women oppose sin stocks more than men do

Niszczota

Białek

2021

Finance Research Letters

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We experimentally test whether men and women differ in their propensity to hold morally controversial ("sin") stocks. Participants (N = 335) were recruited via Mechanical Turk and rated the moral appropriateness and level of comfort resulting from holding controversial and conventional stocks. Results show that women rate sin stocks as less morally appropriate investment propositions and feel considerably less comfortable investing in controversial (but not conventional) stocks. Sex differences in sin stock tolerance were substantial (d = .60) and remained significant after accounting for differences in investment knowledge and risk tolerance. We discuss two important outcomes of these differences.

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“…For the event study, we identified all listed US firms that engage in marijuanarelated business activities based on the Bloomberg Weed Index, firms mentioned in the 2014 and 2015 Viridian Cannabis Industry Report, and firms mentioned by Weisskopf (2019). It was manually verified that all firms conduct business in the marijuana industry.…”

Section: Event Studymentioning

confidence: 99%

“…While this industry has access to all other economic infrastructure, such as the legal system and the labor market, federal law inhibits the marijuana industry from using the traditional banking system (see Hill 2015). In the United States, however, new alternative financial intermediaries from the digital world (FinTechs) additionally exist (Ventura et al 2015;Mills and McCarthy 2016). These intermediaries frequently offer clients faster and more flexible solutions at good rates, such as instantaneous payment services, reliable information tracking, and new borrowing technologies.…”

Section: Introductionmentioning

confidence: 99%

SMEs with legally restricted banking access: evidence from the US marijuana industry

Merz

Riepe

2021

J Bus Econ

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This paper examines how legally restricted access to banking services affects small and medium-sized enterprises (SMEs) in a highly developed country. Using a mixed-method approach, we examine the unique situation of the US marijuana industry. The industry benefits from the superior institutional environment in terms of legal protection and the labor market of the United States. However, due to conflicting state and federal laws it has no legal access to banking. We find significant value effects around three major events that affected future access to banking. These results indicate that banking access remains desirable for the marijuana industry. A survey taken by marijuana SMEs provides insights into what banking services are considered most valuable. We find that marijuana SMEs have problems to obtain financing and handle their transactions largely in cash, resulting in transaction inefficiency and high security concerns. Thereby, we shed light on the value of banks for SMEs in developed countries. We complement the literature on financial transaction services by highlighting the value for SMEs in developed markets.

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Breaking bad: An investment in cannabis

Cited by 18 publications

References 24 publications

The Performance of Canadian Listed Cannabis Equities: 1996-2020

The Performance of Canadian Listed Cannabis Equities: 1996-2020

Women oppose sin stocks more than men do

SMEs with legally restricted banking access: evidence from the US marijuana industry

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