I-Team: Investment High- Cashing in on the Marijuana Industry

(WBRE/WYOU)  Some are calling it an "Investment High" Investors who are rushing to "get in" on the ground floor of the marijuana selling and growing business. A business that experts say will be worth $20 billion dollars over the next decade. Pennsylvania recently legalized medical marijuana and is now in the process of screening applications for dispensers and growers.. but can the Keystone State or its residents cash in on the booming business? The I-Team's Andy Mehalshick takes a look

Financial experts say it is the largest cash crop in the United States. Bigger than corn, cotton and even wheat. We are talking about marijuana. It has captured the attention of investors who are hoping to make huge profits in the medical marijuana industry --which some analysts say is growing  exponentially.


  Dr. Fred Croop- Misericorida University's- College of Business  weighs in
"Well, there's a lot of hype. There's a lot of high expectations for that industry."

 Companies like Novus Acquisitions and Insys Therapeutics saw their value increase  as more states legalized the use of medicinal marijuana.
 For example,   a $10,000 investment in 2014 Novus Acquisitions and Development would have turned into $240,000 in less than a year. 
   A $50,000 investment in Insys in 2013 could have put $800,000  in your pocket in 2015.
   But the market and the value of their stocks pulled back.


Dr. Fred Croop is a professor of Business at Misericordia University-- he cautions investors:


 
"We have to keep in mind it's an industry investment  it's a business like any other and you have to look at it like any other investment you would make."

Croop says sometimes history teaches valuable lessons..

 "In some cases if you look at the prime earnings ratio of these companies they appear to be overvalued. We've seen this in the past with the "dotcom" issue that came up years ago and in some other pharmaceutical issue that have come up as well as tech companies that are overvalued."

 The I-Team's Andy Mehalshick reached out to numerous stock brokers across our region for their input for this special report. They all turned him down.
   Some said their companies did not want them to talk about  marijuana stocks or some of their companies didn't even offer stocks related to marijuana.
   Others told Andy that quite frankly they  did not want to talk about marijuana saying it  was too much of a hot button issue.

Marijuana  is illegal under Federal Law and the I-Team was told by industry expert  that some stockbrokers are reluctant to talk about it.
  Eyewitness News did reached out  a company called New Frontier Data, an Independent technology driven analytics firm  that specializes in the Cannabis industry.--
  John Kagia is,vice-president of New Frontier Data.  He says all indications point to increasing value in company stocks that are connected to the marijuana industry..however he adds

"While there's a lot of speculation due to the expansion of the cannabis industry that its going to grow and expand this market is also very volatile. That perhaps companies being invested in are over valued based on current performances."

Kagia only sees growth in the industry as more states open their doors to the use of medicinal marijuana but that does not mean a boom in the cannabis stocks. He has this advice for investors.
 " Do your homework".. 

 
"Even though 8 states passed cannabis law and 10 other states have done so in total. It is going to take a while before there markets to get up and running." added Kagia

And it's not just short-term, or long-term stock investors. There's the potential for the Commonwealth to turn the medical marijuana industry into a revenue maker for the state - through business licensing and tax revenue.

 "Alcohol is legal but you can regulate the time, place and manner of where people consume it. The same way, I would say should apply to marijuana." noted Eugene DePasquale, PA Auditor General.

Maybe - but at least one state lawmaker, Representative Aaron Kaufer, Republican from Luzerne County isn't optimistic that will happen soon.  

 "This was never meant to be a revenue generator. I don't think that was the purpose of why this bill was done. I do think it will help out marginally on the fringes but I don't see is being a massive economic boom. Certainly it's not going to fix our budget deficit or something like that."


The Medical Marijuana Industry nationwide is expected employ  about 300,000 people over the next year. That includes those connected to the growing and dispensing sectors of the industry  as well as companies that support those sectors.
 


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