Whitney Tilson is high on three cannabis stocks. Unlike most pot startups, these companies have interesting models – and two even make money. | Source: Forbes/YouTube (i), Shutterstock (ii). Image Edited by CCN.
Hedge fund manager Whitney Tilson has his eye on three cannabis stocks, or rather he is high on three cannabis stocks, and whenever Tilson expresses interest in the company, it’s a good idea to take a look. He’s got a very strong track record.
We’ll get to those picks in a moment, but first, keep his picks in context with the challenges faced by cannabis companies.
The Fatal Flaw in Most Cannabis Stocks
There are really only two types of cannabis products. The first is marijuana itself. Canada has legalized marijuana for both recreational and medical use. A few states here in the US have also legalized recreational marijuana, while several more have approved it for medical use.
The marijuana lobby in the United States is very powerful. They’ve long been able to control the narrative in downplaying the dangers of regular marijuana usage. For example, despite the fact that legalized marijuana has led to an increase in drivers wrecking their vehicles while under the influence, a lot of that news gets buried.
The real problem for companies that sell marijuana, beyond legalization and regulation, is that the product will very quickly become commoditized – much like electronics.
Whenever there is new television technology, such as 4K, and as screens get bigger and bigger, manufacturers will put out new models that are very expensive. All the nerds and tech-obsessed consumers rush out and buy the latest model.
Then all the competitors come out with their version of the same thing,