The Current

This man made $1M investing in cannabis — but expert warns it's a lottery

Cannabis companies have had a wild ride on the stock market, with share prices soaring and plummeting before legalization next month. One investor has enjoyed huge success, but experts warn the odds are against average individuals.

Odds are against the average individual investor, says wealth management adviser

Rob Armstrong, a chef from Alberta, has been riding the cannabis stock-market roller-coaster for 18 months. (Submitted by Rob Armstrong)
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Rob Armstrong didn't have any investment experience when he cashed out his retirement savings and bet it all on the cannabis market.

The chef, who works at an oil work camp in northern Alberta, invested $37,000 in cannabis companies on the stock market.

"After 18 months, I turned that $37,000 into a million dollars," he told The Current's Anna Maria Tremonti.

"December 27th of last year was probably one of my best days ever in the market, making about $140,000 in that day."

There's been a boom in investment ahead of Canada's legalization of recreational cannabis on Oct. 17, but volatility has prompted fears of an economic bubble. Tilray, a medical cannabis company based in Nanaimo, B.C., debuted on the Nasdaq in July at $17 US a share. Last week, the stock topped $300, but has since dropped back to about $111.

Brendan Kennedy, CEO and founder of B.C.-based Tilray Inc., poses before closing Nasdaq, where his company's IPO (TLRY) opened, Thursday, July 19, 2018, in New York. Shares in the medical cannabis company, have ranged from $17 US to $300 US since its Nasdaq debut in July. (Bebeto Matthews/Associated Press)

Armstrong has experienced that roller-coaster firsthand.

"I can remember my first real bad day. I've got about an hour drive to work, and in that hour, I lost about $60,000," he said.

"I was sweating, I had anxiety, I didn't know what to do."

He now spends a couple of hours a day researching the companies he invests in.

It's not hard to grow — teenagers have been doing it for decades.- Pat McKeough, wealth management adviser

Odds stacked against individuals

Pat McKeough, a wealth management adviser, warned that investing in the sector is akin to buying a lottery ticket.

"When you're in a full blown boom, like we're in now, the odds are against the average individual," said McKeough, who is also publisher of a monthly newsletter called The Successful Investor.

"Many companies have gotten into the game, and you know that not all of them will succeed," he said of the crowded market.

"It's a legalization boom of a plant that's called weed, and for very good reason, it's not hard to grow — teenagers have been doing it for decades."

McKeough thinks companies have been overvalued and are trading on the possibility of profits they may make years from now.

Recreational cannabis becomes legal in Canada on Oct. 17, 2018. (Fred Chartrand/Canadian Press)

Jason Wilson was more optimistic. He's the president of Budding Equity, which advises investment companies on the cannabis industry.

He advises investment in companies that are better positioned than individuals to take advantage of global opportunities.

"Medical marijuana is legal now in 34 countries globally," he said.

"We also see there is the opportunity on the beverage side ... there is huge potential to disrupt alcohol sales."

Listen to the full discussion near the top of this page.


Written by Padraig Moran. Produced by The Current's Julie Crysler and Zena Olijnyk.

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