You’ve probably read this a thousand times this year already: cannabis is going mainstream by the minute. In the past couple of months, we’ve seen Jim Cramer weigh in on pot stocks on Mad Money, witnessed the debut of a few cannabis companies on major stock exchanges like the NYSE and several multi-million dollar acquisitions close, learned that a heir to Anheuser-Busch is debuting his own weed brand, and even had a former MTV executive take over the CEO role at a cannabis-focused media company.
Taking cannabis yet another step closer to the mainstream, Tim Seymour, founder and Chief Investment Officer of Seymour Asset Management, best known as the co-host of CNBC’s Fast Money, led a marijuana-focused investment panel at the Benzinga Cannabis Capital Conference in Toronto, Canada. Alongside Seymour, discussing the state of the cannabis industry, the transition of weed products toward the consumer packaged goods category, and other related topics, were:
- Viridian Capital Advisors Vice President Harrison Phillips.
- Arcview Ventures General Partner Jeanne Sullivan.
- Tidal Royalty CEO Paul Rosen.
- Merida Capital Partners Managing Partner Mitch Baruchowitz.
Fortunately, The Fresh Toast was there to catch the interesting panel, and had the chance to have a one-on-one chat with Seymour afterwards. See the video above, and find some highlights below.
Off camera, Seymour explained the reason for him to be hosting a panel at the Benzinga Cannabis Capital Conference. Tim is an asset manager who’s been focused on emerging markets for two decades. As such, he was drawn to the marijuana industry a few years ago due to the “tremendous growth” it offers. “This is a new asset class, this is what gets me excited,” he told The Fresh Toast.
Ultimately, investing in emerging markets, especially those in their earlier stages, “is about understanding your macro… and understanding the tailwinds from those macro trends,” he explained.
Check out how this applies to cannabis in the video above.
A Word Of Caution
According to Viridian Capital Advisors’ Cannabis Deal Tracker, more than $7.6 billion have been invested into cannabis companies in 2018 – and this is before counting the yet-to-be-closed $4 billion investment Constellation Brands is making into Canopy Growth. In this context of huge money flows, Seymour recommended investors to be cautious.
His top piece of advice for investors was: do your work. “Get as much insight into the balance sheets and the operations of the company [as you can]… But ultimately, right now, especially in early-stage companies, it’s truly all about the management team.”
The other very important thing, he added, is understanding how cannabis stocks trade, as many trade by appointment or have very little liquidity.
What About ETFs?
Finally, we asked Seymour about ETFs, or exchange-traded funds, which aggregate a number of stocks that investors can buy into at once, relieving them from the heavy duty of picking stocks.
An ETF is “a diversified portfolio [so] you’re not placing your bet in two, three or four stocks… Ideally, you’re placing your bet in 25 to 40 stocks… So, ETF investing in the cannabis sector, I think it makes a lot of sense,” he concluded, noting that while current options in the cannabis space seem a bit immature, there is no reason to be really critical, and adding that investors should look for actively managed ETFs when picking one.