Clearing The Smoke In Marijuana Industry's Growth With Kiplinger's Tom Petruno
Kiplinger's Personal Finance contributor Tom Petruno understands the realities of the emerging marijuana industry.
“If you look at what's happened right in Washington and Colorado and say: ‘Well…this is probably some kind of growth industry of the future, right?'. But what typically happens at the beginning of things like this where you've got a lot of small players in the business…a lot of people are going to say: ‘I'm cashing in, in some way on the goods,'” said Petruno.
According to Petruno, typically many small players surface and become big players in these situations. Then, those big players are swept away into conglomerate folds. This is common within the technology sector, which is probably the most famous sector in the market for rapid successes that are eventually acquired.
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“If you're actually investing opposed to purely speculating, you are better off to wait for the industry and see who emerges as a big player. Now, one of the things that a lot of people think is that it's going to be the tobacco companies — that the huge tobacco companies are going to come and going to be first in line if marijuana becomes a trend of more legalization,” said Petruno.
Petruno painted a picture of David and Goliath, citing big tobacco's “heavy financial firepower” if they do decide to push into the industry.
He said that any up and coming marijuana company should be treated like buying a lottery ticket.
“Be prepared to lose every single thing you put into it,” said Petruno.
Petruno jokingly compared it to a trip to Las Vegas, saying that some people are in it just for fun, despite the fact that there's good chances they'll lose.
“We're really at that stage of it now where you just can't know who is going to end up really being a player and who is going end up falling by the wayside. The trend in this stuff — let's say more legalization happens and actual companies begin to emerge and they are growers…often, you find that five years later very few of those companies are left,” said Petruno.
“It's all pure speculation at this point,” Petruno concluded.
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