The Green Rush: Making Big Bucks in Marijauna Stocks

Erica Camilleri invested in the marijuana industry this summer. Since then, she’s made a 250% return over 9 months. I caught up with her to see how she managed to do all of this with her own savings, while being a third year student at Western.

Katherine: Investing is one of the most daunting tasks for so many of us our age – we all know we should do it, but it’s so hard taking that first step. So, I’m curious: how did you get into investing?

Erica: Well, ever since I was little, I’ve always been into going to the bank. I got a savings account when I was very young, and as soon as I turned 18, I opened my Tax-Free Savings Account (TFSA) so that I can get a mutual fund right away in high school. My parents aren’t business-y. They never pushed me to go to the bank or get a mutual fund. I just always had a knack for business and did a lot of research on my own, and my parents supported me in my journey.

As soon as I came to university, I got a lot more involved with investing and research on my own. I changed my mutual fund to a higher risk portfolio because I realized at my age, I have that higher risk tolerance to stomach the short-term ups and downs of the market.

In my second year of university, I kept hearing about the marijuana industry boom through my cousin’s husband. I started to do some research myself, and noticed how much people were making off companies that barely had any revenue.  

Eventually, I put in some money in March of 2017. I knew it was an extremely high-risk investment, but I knew my risk tolerance well. And even though I was pretty confident in the industry, I also didn’t invest all of my money. I would be pissed if I had to cash out $500 in losses, but I also knew it wouldn’t be the end of the world.

Summer was really rough though. I really experienced the risky side of this investment, and saw the stock drop half of its book value. It definitely wasn’t a fun time, but I also didn’t want to realize a loss. So I kept my money in, and knew that once marijuana legislation was passed, the company would really pick up momentum.

This fall, lots of mergers happened in the industry, and there were more and more investments in producers of weed. Since March, I’ve gained 90% in my portfolio.

K: Damn, that’s one hell of a ride. And how did you trade these stocks – do you use a brokerage?

I use CIBC Investors’ Edge. They’re for DIY investors. I pay $6 fee every time I buy or sell (which isn’t very often anyway), and there’s no management fee, which I find pretty sweet.

K: I know the biggest barriers to investing at our age is not just the fact we find investing incredibly daunting, but also very realistically, it’s hard finding disposable income to put away for the long term. How did you manage to save up money to invest?

I’ve always been really entrepreneurial. When I was 12, I knew I wanted to buy a car as soon as I was 16. So when I was 14, I started my first job at small cafe, then Panera Bread. I worked Saturday and Sundays, took as many shifts as I could, got paid cash, and saved all of it. By the time I turned 16, I was able to hit my goal of buying a car all with my savings.

So then I started thinking… what should be my next goal? I started devising my whole savings plan. I saved all my birthday and Christmas money. I worked at the City of Toronto, working 9-5 at the age of 16. By 18, I knew I wanted to save more money and be ready to invest.

When I did turn 18 though, I wasn’t rushing to invest. I knew I needed to do research. Therefore, after reading a ton online, I played it safe by purchasing a mutual fund to start. As I got more into it and knew I wanted to pursue business professionally, I found out that mutual fund fees were a bit too high. I looked into other ways to invest and get high returns, without paying these fees. Since I also decided I wanted to pursue business professionally as a career, I developed an even bigger and realer interest in investing, and gained access to resources that help me as well.

And now, I’m really into investing in the market. I know it’s the beginning of a long and exciting journey ahead.

K: Speaking of research, I wanted to provide our readers with very actionable next steps – where do you go for reliable investing insights?

Honestly, it’s pretty simple. It all begins with a Google search. For example, I literally typed in “What cannabis stocks to invest in” and started from there. I got a list of ten most popular firms. Then, I researched them individually and looked at their financial statements. When I first started, I wasn’t a business student yet, so I honestly didn’t have a lot of tools to analyze these statements. I also got the help of my family friend who’s had experience investing in the industry.

As I did learn more business from my coursework though, I began to read analyst reports as well. These helped a lot.

If I could go back, I would’ve also gone on Capital IQ and Bloomberg (they do financial research and analysis on all the companies out there). I got a little lucky in the sense that my “qualitative” analysis and speculation of the industry ended up proving useful. When Canada Goose was launching their initial public offering (IPO), I bought their stock. Now their stock is up 65%. I remember everyone was bashing on it, saying that their jackets are gonna go out of style. But that’s not what it’s about. Just because you don’t wear the brand, doesn’t mean they don’t have a good business model.

Everyone should invest. Even if you don’t have the interest or resources to invest in the most high risk volatile markets, there are many different options out there, like passive mutual funds that follow the rise of the larger economy. We’re so young, we can afford to take the risk. I’m lucky enough to have had jobs in the past and save up the money. One thing to keep in mind is that my parents paid for my school – I didn’t have to worry about education. To be honest, if I had to pay for school, I probably wouldn’t be able to invest as much as I do, but I definitely would’ve started as soon as I had the means.

K: It seems like you’ve got everything under control. What do you think your next steps are in your investing journey? Ever thought about selling your marijuana stocks?

I definitely want to learn more about cryptocurrencies. I think that’s the way the world is going. Next semester, I kinda just wanna sit at the Bloomberg desk at my school and see what’s good haha.

I don’t think I’m ready to sell my weed stocks just yet, but I definitely want to diversify. Weed stocks were definitely fast money, but I know that’s not sustainable for the rest of my life.

 

K: (Fun fact: From the time I wrote this article to when it was published, over two weeks, Erica’s gains changed from 90% to 250%… which just shows what a rollercoaster the weed stocks are going through right now. A word of caution: remember, this is a sign of volatility – it is equally likely to drop the same amount as it can go up.)

Disclaimer: This article does not intend to illustrate good or bad investing practices, nor does it intend to provide financial advice. It was merely to share a fellow young person’s personal experience in investing. Remember that just because a company has done well in the past, does not mean it will continue to do well. Always ensure your investment choices are well-researched.

By |2018-01-27T23:31:31+00:00January 16th, 2018|Blog Series|1 Comment

One Comment

  1. customer service essay March 19, 2018 at 2:46 am - Reply

    With the rise of the cannabis industry, small business owners and everyday retail investors are looking for the safest and easiest way to invest in the space. In this space, there are two kinds of opportunities for investors to get involved: private investments and public companies. Investing in private placements has the potential for large payoffs, but it also comes with the inherent risk of not being able to sell your equity easily. But for most people looking to invest in the cannabis industry, buying publicly traded stock will be the easiest and quickest route to go with the lowest barrier of entry. Most assume that, because of the federal legislation regarding cannabis, there is no way to invest in the industry. This is wrong, as there are many ancillary businesses that are publicly traded.

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