The Lede, Thursday, May 31, 2018
By David Royse
The Big Long?
There’s a scene in the movie The Big Short – about the Wall Street meltdown of 2008 – in which it dawns on trader Danny Moses what craziness was going on in the housing market as he talked to a mortgage broker (who tells him that he was recently a bartender, but now owned a boat.)
Here’s the scene:
Moses: So how many of these are, uh, adjustable rate mortgages?
Broker: Well, most. Yeah, I’d say about ninety percent. The bonuses on those skyrocketed a few years ago. Adjustables are our bread and honey.
Moses: So do applicants ever get rejected?
Broker: Seriously? Look, if they get rejected, I suck at my job.
And investors got rich on crazy investments into these mortgages while the economy plunged into turmoil. That was the Big Short.
Now, Moses has stumbled into a new financial product that’s equally crazy. But this one, he says, is legit.
“This is the Big Long,” says Moses during a short talk today in New York.
This, Moses says, is the cannabis industry. Pot. Marijuana.
Moses describes himself on his Twitter bio as a skeptic. But he’s a believer in this new market.
I’m coming to you from the heart of the America’s financial world. It’s interesting that one of the big trade shows in the cannabis industry is in Manhattan, just a few blocks north of Wall Street. Because this is the next dateline in the story of cannabis, one of the biggest emerging industries in the country.
There was a time when the cannabis story was datelined San Francisco, when it was stoners and head shops, or Woodstock, when it was the counter culture. Then it moved to the suburbs – where moms with epileptic kids and grandmas with chronic pain and glaucoma were quietly talking to their doctors about marijuana. Then it moved to state capitals – and in more than 30 of those capitals it’s now kind of an old story. Their lawmakers have already made marijuana legal for medical purposes, and in nine states they’ve made it legal for non-medical purposes. Each place where this story comes up represents broadening of acceptance to a once stigmatized drug, something many of us thought was for just for old hippies and young rappers. But when I talk to people about marijuana lately, they’re most often wearing a suit, not a rolled up Jimi Hendrix headband or a Cheech and Chong shirt.
Cannabis is on the verge of becoming a Wall Street story.
Last week a Canadian marijuana company called Canopy Growth began trading on the New York Stock Exchange. The NEW YORK FREAKING STOCK EXCHANGE. Where there’s money to be made, investors will go, notes Moses.
The market is growing by about 27 percent – doubling in size every 32 months – says Sumit Mehta, who opened the Cannabis World Congress and Expo this morning here in New York with a rosy update on the industry. The CEO of Canopy Growth also spoke – and he’s bullish despite his company’s stock bouncing up and down a bit in its first week.
Wall Street may be about to get reefer madness. And that’s a very new thing.
If he’d told people to buy marijuana stocks a few years ago, Moses said … well, he wouldn’t have. “Five years ago, you’d be vilified.”
Et Tu Canada?
Sticking with what Wall Street is looking at today:
An interesting investment story from Bloomberg – GM says a fund controlled by SoftBank is investing more than $2 billion in GM’s Cruise driverless car company.
And one cautionary investment story around another emerging industry we write about here from time to time – cryptocurrency: The New York Times reports on Envion, a Swiss company that had seemed like one of the safer players in the cryptocurrency world. It’s now melting down.
Meanwhile, for economy watchers: reaction from countries we hit with new tariffs was predictable – but still, it’s going to sting a bit. As Bloomberg reports, the EU Canada and Mexico will put new duties on products coming from the USA.
More techy growth news in Huntsville. Al.com
WIRED: “Your next glass of wine might be fake – and you’ll love it.”
NOTES FROM THE AGE OF DISRUPTION:
Is having a bit of an identity crisis over its work with the government on AI. NYT
Chinese solar panel maker is on track to open its plant in Florida, hiring workers. WJCT
Check out our coverage of the New York cannabis industry, and the conference about the industry as a whole.
As always, I welcome your thoughts. @daveroyse on Twitter or email@example.com