Around the world countries have been relaxing their cannabis laws and medical usage is now legal to some degree in many countries around the world and 29 states in the USA. The trend also includes decriminalising or fully legalising recreational use of the drug. As of January 1st 2018, California is the 9th US state to legalise recreational use of cannabis.
Canada is expected to pass legalisation into law this summer or autumn and a significant number of European countries are at various points along the same route. In Sweden, the legal framework around cannabis, or marijuana as it’s also known, is still among the strictest in Europe. However, despite that, a recent Reuters report suggests that Swedes investing online are among the most enthusiastic in Europe when it comes to investing in cannabis stocks.
Data provided by Nordnet, one of Scandinavia’s most popular online investment platforms with 670,000 customers, shows that the stocks of companies in the legal cannabis industry were among the most traded in January and February. Over the course of the two months in question, there was a net £60 million withdrawal of Swedish retail investment capital from traditional stocks such as H&M, Ericsson and banking group Nordea.
Among the most popular cannabis stocks are Canadian producers such as Canopy Growth and Aurora as well as Heliospectra, a Swedish manufacturer of the lighting used in commercial indoor ‘grow houses’. Heliospectra is able to operate out of its headquarters in Sweden and have a public listing on the NASDAQ OMX Stockholm because there are no laws around technology intended for use in the legal cannabis industry.
A spokesperson from Avanza, Sweden’s largest online stockbroker with 600,000 clients, corroborated the Nordnet data. The company additionally added that the average investor in legal cannabis stocks was a 20 to 40-year-old male investor looking for high risk to high reward stocks. Many also have speculative investments in Bitcoin.
The legal cannabis industry is considered by many investors as a way to get into a new industry of huge potential value at the ground level. Most cannabis producers, even the big US companies, are listed on Canadian stock exchanges. Due to more relaxed regulations, it is much easier for them to access capital markets in Canada compared to trying to list on one of the major US exchanges. Others, like Heliospectra, who manufacture auxiliary products sold to manufacturers or distributers, can choose to either list on a domestic exchange or in Canada alongside other legal cannabis industry companies.
Despite the high level of interest in cannabis stocks, the Swedish population currently seems happy for local legislation around use of the drug to remain restrictive. Despite the fact that Swedes are a generally liberal society, a recent poll suggested a huge 83% are against the legalisation of cannabis use. When it comes to stocks, however, there appears to be no real ethics conflict for most Swedes. Those investing online in the industry are said to look at it like any other business opportunity.
They should, however, be careful. Some analysts believe many cannabis stocks are overvalued, with investors adopting a ‘gold rush’ mentality to the new market. While there is undoubtedly significant potential in the market, its nascent stage of development makes it difficult to know which companies will rise to the top. The share price of many is based more on future potential than current fundamentals, making them a somewhat risky bet.
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