Prohibition does strange things to people’s minds… or rather, the end of prohibition does.
Over the course of years, or even decades, we are constantly told that something is wrong, immoral, even evil. And most defiantly bad for us.
Then one day the authorities change their mind and that same thing is now A-Okay.
The thing itself hasn’t changed, but the narrative around it has. We’re now told that awful thing never really was awful in the first place. It may even have been good all along.
How are we supposed to resolve all that in our minds?
Well, many people don’t. Or if they do it takes them a long time to come around the new way of thinking.
Others, however, who most likely didn’t buy into the “evil” narrative in the first place, will welcome the change.
And a small group will see a big opportunity.
The opportunity is created exactly because most people will take a while to come around to the idea that prohibition is over.
These people will not be willing to invest in it or build businesses around it until it’s completely mainstream and the end of prohibition is resolved in their minds.
This is why so much opportunity was created at the end of the alcohol prohibition in the US, and why US businesses and investors are making so much money in Marijuana right now.
The question for us in the UK is, will the same thing happen over here?
Church of England blesses medical use of marijuana
That was the headline in The Times last month.
So, the Church of England – one of the biggest moral authorities in this country – is now happy to profit from people using marijuana (so long as it isn’t used for fun).
From The Times:
The Church of England has given its backing to the use of cannabis for medicinal purposes and said it is happy to invest in the sector.
The Church Commissioners for England, who handle £8.2 billion of church assets, ban investment in companies that profit from recreational drugs but said for the first time that they would consider investing in companies that work with medicinal marijuana now that it is legal in the UK.
Edward Mason, head of responsible investment for the Church Commissioners, told the Financial Times: “We make a distinction between recreational cannabis and medicinal cannabis. We are content with it being used for proper medicinal purposes.”
To be clear, nothing to do with medical marijuana has changed.
Mere months ago customs officials were ordered to seized a cannabis oil prescription which Charlotte Caldwell had brought over from the US for her severely epidictic son.
At the time the UK government insisted there was no medical use for this medicine, even though it had been prescribed directly by the biggest paediatric hospital in the world.
A public outcry ensued and eventually the government backed down. It would allow doctors to prescribe cannabis-based medicine in extreme cases.
But those prescriptions are very hard to come by.
From the NHS:
Prescribing of cannabis-based products for medicinal use is restricted to only those clinicians listed on the Specialist Register of the General Medical Council.
Any decision to prescribe must take into account the relevant GMC guidance and the relevant NHS Trust governance procedures for unlicensed medicines in the normal way. In addition, a Specialist on the General Medical Council Register should only prescribe within their own area of practice and training, and the decision to prescribe should generally be agreed by the multidisciplinary team.
So, one year on from the whole debacle, were left in a situation where, as The Times states:
The medical use of cannabis was legalised in the UK from November although no patient has been issued a prescription on the NHS, which has strict guidelines. Only patients who are able to afford private prescriptions and the high import cost of a scheduled drug, which can be more than £1,000 a month, are benefiting from the change at present. An estimated 10,000 people with multiple sclerosis risk jail for using it to alleviate symptoms.
To be clear, those products cost pennies to make. The companies can only charge so much because of all the complex legislation that surrounds them.
That legislation, as I’ve written before, simply benefits powerful politicians and big business at the expense of those in need.
And now, the Church of England has given its own blessing to itself to profit from it as well.
First the insiders fill their bellies
The whole situation with medical cannabis in the UK is reminiscent of the IPO craze in the US.
Yesterday my colleague was talking about an interesting podcast he’d listened to from James Altucher about the IPO business.
Altucher had basically said on the podcast that by the time a company IPOs, all the smart money has already gotten a cut, at a much lower price.
The IPO then draws tons of attention, the masses jump on it and the smart money sells at a massive profit before the price collapses.
I managed to find an article from Altucher in 2017, where he says broadly the same thing about the SNAP IPO (which went on to tank).
Here’s the truth: IPOs are all about PR. A chance for a company’s supporters and fans to put their money where their mouths are and get in on the action. They aren’t where savvy investors make their money.
Why? Two reasons: It’s a blank slate—no one really knows anything about the company yet. And all of the smart money, the big institutional investors that get to participate in a pre-IPO “road show” and invest at the IPO price (or sometimes an even better price) are all paying less than you or I would.
Why would I want to invest in a company that I know almost nothing about and has a bunch of massive investors sitting around waiting to make a profit on my stupidity? It’s not like these shares trade at the actual IPO price for long. They usually spike on release day before dwindling back down over the course of the next few weeks.
Because medical marijuana is so hard to get hold of in the UK, the companies making and importing it – which have strong ties in our government – can charge outlandish prices.
The insiders are all filling their bellies while the masses foot the bill.
Ethically investing in medical marijuana
It’s clear that those who control the UK are slowly coming around to the idea that medical marijuana may actually have legitimate medical uses… and also a lot of moneymaking potential.
It’s also clear, however, that they are going to milk the current legislation for all it’s worth before they let the masses benefit from it.
The thing is though, in the US, and Canada, cannabis-based companies are making public investors massive returns.
In many states both recreational and medical cannabis is now legal (although it remains illegal at a federal level). And in Canada, both recreational and medical cannabis is fully legal.
So right now, if you want to invest in it, the best way is to look towards US and Canadian stocks.
How you can get an advantage over the insiders – for once
Thinking about the way all this works reminds me of why I like crypto so much.
Crypto is known for taking the status quo and turning it on its head (or at least attempting to). And that is particularly true when it comes to investment.
As I said, in the traditional world of investment, it’s the insiders and institutions that have the advantage.
They buy into private companies before those companies IPO – usually for a much cheaper price. And then when the masses flood in, they profit.
Well, in crypto, institutions are actually at a disadvantage to private investors. Why? Well, because crypto is so new, it is unregulated. And because it is unregulated, these massive institutions can’t plough their money into it… but the public can.
I already suspected this was the case, but I had it confirmed at the Blockchain Week Paris, during the “State of the art: institutional investments in the crypto space” panel discussion.
As I said when I reported live from the summit:
The panel all agreed the only places really investing directly into crypto now were hedge funds, high frequency/algorithmic traders and venture capitalists (VCs).
The interesting thing they said was at the moment institutions are investing in “hygienic investments” within the space. That was a term David Fauchier of Cambrial Capital used.
He said the only way institutions can invest in the space today is by buying “picks and shovels” (oh how investors love to use that term).
So these hygienic investments are basically buying equity in real companies that work in the crypto space. But not in the actual crypto assets.
Because this is the only way institutions can get in, these companies are bid up to massive valuations.
But as he explained, you merely end up paying much more for the same type of exposure: if crypto goes up these investments make money. If it goes down, they lose money.
In this way, individuals have an advantage over institutions right now. We can buy into the asset directly. Most institutions can’t… yet.
So in crypto, in effect, you are the insider and the institutions are stuck watching from the side-lines… for now at least.
And if not, well, that’s okay too.
With this in mind, that’s why Sam Volkering is hosting a special crypto event on 16 July.
Sam has found two cryptos that he believes could turn a £50 investment into as much as £10,000.
Sounds ridiculous, right?
But then you have to remember that during the last crypto bull run those kind of gains were fairly common… of course being in the position to profit from them was less common.
But that’s where Sam comes in. This is a man who first bought bitcoin at $12 and made more than 20,000% on Ripple.
And on 16 July, he wants to show you how you can make those kind of returns, too. If that sounds like something you might be interested in, you can get your name down to watch for free here.
And if not, well, that’s okay too.
Until next time,
Editor, Exponential investor
Category: Genetics and Biotechnology