For over a decade, investors have been trying to bet on the fast-growing legal cannabis industry. In the years since, 40 U.S. states have made cannabis use legal for medical purposes; another 24 have legalized it for recreational use.
Still, canna-biz analysts and market punters have had their eye on a bigger prize: federal legalization and regulation. Those bets have been like trying to catch a falling knife.
Unfortunately for investors, a rescheduling of marijuana has done little to dignify their portfolios. In their years-long wait for legalization and regulatory clarity, the values of two cannabis-focused ETFs have practically gone to zero; the Amplify Alternative Harvest ETF and AdvisorShares Pure US Cannabis ETF are down 90% and 92% respectively over the past five years.
And complicating its path forward, marijuana's benefits have been challenged by a crop of evidence that shows that the drug can be harmful, too. Aside from dependence, high-THC cannabis products have been linked in particular to cognitive impairment, paranoia, and even psychosis or schizophrenia.
That's particularly troubling as a new NYT opinion piece has documented the surge in pot use, as well as the long-term gravity of usage, especially by young men. NYT makes the case that limited regulation has led to "public health challenges."
That might present challenges of its own to regulation, as well as a frankly unearned perception that weed consumption is a lesser evil.
So what's the right path forward? Other vices like cigarettes and sports betting remain legal—things we know to be he harmful, with virtually no benefit for the individual. And known risks considered, marijuana appears to help many Americans afflicted with anxiety, depression, or other ailments.
A "puritanical" approach (that is, keeping it illegal) is unlikely to fix the problem, nor the ascendant consumption. To that end, as the case for federal legalization takes a backseat, it'll be up to states to take charge on labeling risks from weed consumption, setting an example for the time when the political establishment is prepared to take up the issue more seriously.
And for investors banking on seeing green? Well, you'll have to wait for another catalyst for this trade to light up again.
