How an investment manager is viewing the future of Weed and Weed Stocks.

We brought in an investment manager specializing in Cannabis to answer all things surrounding this industry.

CB1 Capital is an investment manager that specializes in the supply chain of cannabinoid-based wellness solutions, products & therapies that address a wide range of unmet medical conditions, or have commercial use-cases. Todd Harrison is the Founding Partner of CB1 and CIO. Todd has spent almost three decades on Wall Street managing risk & researching market strategies. His institutional experience includes Morgan Stanley Global Equity Derivatives (VP), The Galleon Group (MD-Derivatives), and Cramer, Berkowitz LLC (President and Head of Trading). Loren DeFalco, CFP, is a Partner of CB1 & Head of Research. Loren cured himself of epileptic seizures through a regime of CBD and cannabinoids 9 years ago & continued to research ECS through medical journals & scientific developments. His intimate understanding of the ECS system & nutraceutical arena makes him an ideal choice to lead research efforts.

How do you invest in a product industry that might be “illegal” by you with confidence? Where do you see the industry in 5 years? 20 years?— michaelbozzello

We invest in things that are considered legal in the areas that we are involved with. For instance, a pharmaceutical company uses an IND to work with a schedule 1 drug, which makes it legal. Also, being careful to invest in companies that are following local laws, such as state laws and not crossing state lines to violate the Commerce Clause. The industry is already projected to grow a massive amount over the next 5 years through the current paradigm of state dispensaries. However, the corresponding 10–15 years will be more focused on the pharmaceutical pathway as more advanced formulations an methods of delivery will likely lead to greater medical efficacy.

How big to you see the North American recreational market getting in comparison to alcohol in the next decade? — GregRieben

We believe there will be a evolutionary change in terms of how people perceive cannabis an alcohol. Alcohol will lose market share to cannabis as it has in states where it is legal now, however, we see a greater change in terms of OTC and pharma meds to cannabis.

KSHB makes a lot of cash. Why no volume and recognition? — Magnoliafarm1

KSHB has a unique model.

What are your thoughts on Emerald Health Therapeutics EMHTF? Has not seen close to the gains the others have… — hoover1

Emerald Health is more focused on medical applications and most of the buzz in the sector right now has to do with adult-use legalization.

Are there investments, public or via legal crowdfunding for: improved sleep, post-op pain mgmt — edwardrooster

Yes, there are pre-clinical and clinical trials for sleep and pain indications, not specific to post-op that I have seen, but for various pain indications.

Recreational use, CBD oil are products I know about. Anything else available now? — madewa

There are patches, pill, creams, and time-released pills.

Currently, what is the largest barrier to growth/expansion of the Cannabis industry? — Lonesome

The largest barrier to growth is lack of proper banking regulation and the inability for these companies to have debt-financing.

What are the best conservative ways to invest in marijuana long term?-RenRen

We cannot give investment advice.

What are some key upcoming dates to watch for Canadian legislation? — FamisDave

The vote today and the corresponding amendments to be taken up by the house are key dates for Canadian legislation

Would you agree that Aphria, Canopy, and ACB are the “big three” of Canadian stocks right now

They are 3 of the largest by market cap.

How significant is the listing of CGC (Canopy) on the NYSE for MJ stocks? — FamisDave

Any cross listing to US is a positive sign in these early stages of this sector as it develops internationally.

Do you believe there is any risk the Trump administration could take action against American CGC stockholders? — FamisDave

There is always risk that unforeseen events can occur, we have no information to lead us to believe CGC will have action taken against them by the current administration.

Would Democratic victories in midterm elections be bullish for MJ stocks? — FamisDave

It is likely that a democratic victory in key states would be seen as bullish.

Smoking causes the lung cancer! Invest in a cure not in a cause.-ElizabethII

There is no positive association with smoking cannabis and lung cancer: https://www.atsjournals.org/doi/full/10.1513/AnnalsATS.201212-127FR

How do you see future of so many weed stocks?? and many more are popping up almost everyday… — urdiwana

The sector will be volatile as it moves into a mature market over the coming decade.

What are the 3 big players with the most marketshare in this space (US and Canada companies only please)? — clever_lx

The 3 largest per market cap are GW Pharmaceuticals, Canopy, and Aurora.

how significant is the CBD/THC market for companion animals (cats and dogs)? i.e. what % of market in 5 yrs? — Aristhotle

The CBD market for pets should be huge, I’ve personally seen many benefits of pets and CBD. THC on the other hand is likely not huge for pets as the CB1 receptor is more dense in the dog brain and therefore has elevated psycho-activity in comparison to a human.

I’m interested in providing capital investment. — pbecker28

Please contact us at info@cb1cap with any and all questions not able to be answered here.

What are underrated verticals in the cannabis industry? i.e. testing, CBD edibles, etc. — sfoakbay51

Testing is underrated as many do not understand the necessity and how it is likely to be a regular way of doing business in this sector.

What if the Feds start enforcing federal law and raiding cannabis facilities? Why won’t banks touch these firms? — zeromein

We feel it is unlikely that the Feds will come after cannabis companies acting in compliance with State law. AG Sessions has said he will leave it up to the State AGs to decide whether to go after these companies or not. Federal banks can not touch these companies until federal banking laws are changed.

What type of market size is market pricing in for epidiolex right now for lgs and ds? What is best biopharma value? — popeofvillage

Epidiolex is the bulk of the price of GW as of now, a lot will depend on the DEA classification once FDA gives a final decision this month.

Is dispensing a defensible business? branding and packaging? — popeofvillage

Dispensaries are likely to remain in the US model going forward. However, it will likely move to a nutraceutical/adult-use type of operation vs “medical” as the current Dr/Pharma model develops more elegant approaches to cannabinoid therapy and will also be covered. Branding and packaging will be key for the former.

Are the the Canadian companies like Aurora, Invictus, Green Organic overvalued in your opinion? — Knotifi

We believe the Canadian LPs are pricing in overseas and higher margin products that have yet to hit the market. The market is forward looking and we see the medical aspect of cannabis not fully realized.

Of the top 5 Marijuanastocks you see Tim Seymour talk about on fast money are any traded on the NYSE? — Investingfinally1

There are 2 large LPs trading on US exchange, Canopy and Cronos.

Please, how is what you are doing will benefits the individual human being and the society?--FrancisII

We believe by reintroducing a plant that has served society at large over the last 10,000 years (sans last century) will help in the effort to limit pollution, treat illness without major side effects that current meds do, and stopping the mass arrest of citizens for using a non-lethal substance is good for society.

Is smoking pot and trading at the same time recommended by professionals? Asking for a friend. — overratedtrader

We do not recommend you smoke pot and trade at the same time.

So, like I was wondering, man, do refrigerators have like, intelligence, man? Like, minds? Why do we exist? — dBCTrades

The stigma propagated by Hollywood that people who use cannabis are stupid is a major offsides and stops real progress for those that benefit from this plant. So, no, refrigerators do not have intelligence…

Do you see $CGC moving into the American market anytime soon? What would it take for that to happen? — NitTwit212

We suspect once US legislation allows for it, and not in violation of TSX, yes.

CGC has already called bids on these patents. canopy-health.ca/canopy-ani… — FLS383

CGC has patents for insomnia.

How soon do you see the biggest opportunity in M&A around this space by companies like $JNJ $STZ etc.? Now? 5 yrs? — chadtempestAdminister

It will likely be within the next couple of years, legislation in the US needs to change for certain companies to be involved.

Any thoughts on how much $SHOP can benefit from 🇨🇦 Recreational cannabis? — Jeffs43

We think distribution is key, however, in regard to a specific investment we cannot give advice.

Canadian cannabis really shot up, do the US cannabis stocks follow with 400–500 percent moves like Canada? — Trader_Rick_999

We believe the US sector is undervalued relative to Canadian LPs.

How much of your analysis is based on actual use of the products in question? — AdmiralTweezers

Our investment analysis includes speaking to people who use these products on a regular basis to help better understand the market.

We are getting past old school understanding of MJ Med (re: unaware of smokeless). How is mj doing with lobbying? — rdouglas41

MJ lobbying has exploded over the last year, still small relative to other lobby groups, but that is changing.

What kind of help you see in Europe to Legalize? — miau

We foresee Europe acting quickly for medical cannabis and likely adopting the German model of it being sold through pharmacies and reimbursed by insurance.

Banking. Federal law. Discuss. — DoctrBenway

Mnuchin has said recently that cannabis banking laws was the Treasury department is at “Top of the List”. https://www.marijuanamoment.net/marijuana-banking-at-top-of-the-list-treasury-secretary-says/

How is this not simply going to be a commodity like growing corn or all of its various end uses? — badamsi

The input likely commoditizes over the next few years as supply outpaces demand, however, it is the end products and alternate forms of delivery of these compounds that will benefit the most.

Is the investment outlook better for Canadian companies or US companies? — dennismccain

The outlook looks bright for both, however, the US is a better relative value right now.

There does not appear to be any real brand loyalty or brand uniqueness that would make their product special. — badams

Branding is starting to take hold in states with more established programs. People want reliability, especially with a product that has such huge variance.

Any thoughts on the marijuana breathalyzer developer BLOZF?! Speculative play, but If it becomes legal this is going to be a huge necessity. — StopSpeculating

Breathalyzers for cannabis are still in development as THC metabolites stay in your system and show up in a test even when you are not high.

Is it too late to come into the party ? One stock that has the best growth for the next years. — Kirublue

We believe the “party” is just getting started as most still view this as a vice substitution, it is more of a wellness play. It is not about getting high, it is about getting well. (TM)

Does GWPH have a potential moat here? Will insurers be willing to pay for their product? Any off-label potential? — BKBioBull2018

Insurers will be willing to pay for Epidiolex. Off label could be large, need at least a class 4 from DEA.

We hope you enjoyed this Q&A! Press the 👏 below if you really liked it and