Yahoo Finance Cannabis 'is a huge opportunity' for long-term investors, Ross Gerber says
The consolidation in cannabis stocks since their February highs presents a lot of potential for long-term marijuana investors holding fast, according to one investment advisor.
“For investors who are looking at the long game, this is a huge opportunity because the players in cannabis have only gotten stronger over the last year,” Ross Gerber, president and CEO of Gerber Kawasaki Wealth & Investment Management, said on Yahoo Finance Live (video above).
“The numbers that I've looked at for the quarter, the most recent quarter, have been amazing," he added. "And they're very well-run companies that are now trading at multiples that look very reasonable for their short- and long-term growth rates."
Over the last year, Gerber noted, Gerber Kawasaki is up “substantially” on cannabis — despite giving back half those gains in the last year.
“I'm very close to pulling the trigger and adding to these positions right now, aggressively,” he asserted.
Gerber also disputed the notion that growth in the U.S. weed market could slow, even as some Canadian cannabis companies struggle with profitability.
“There is no slowdown in cannabis," Gerber said. "And, in fact, I would argue the opposite. The new products that are coming out from like drinks and some of the new edibles, but really in the drink side of the cannabis business is — this stuff is booming. We're seeing cannabis lounges now being approved all over. One in Vegas, for example.”
In all, he estimated that the U.S. cannabis market is between $70 billion and $100 billion, “and we just scratched the surface.”
Cannabis companies ‘are home runs’
Some Canadian cannabis companies, like Canopy Growth (CGC), have deals in place to enter the larger U.S. market once the sale of weed is legal at the federal level. And once federal legislation relaxes restrictions on banking and taxation, “these companies are home runs,” Gerber said of the mix of North American companies.
However, Gerber did point to one reservation that could hamper cannabis stocks: Delayed marijuana legislation.
Currently, cannabis is legal on a recreational level in 18 states and allowed in varying medicinal capacities in 29 other states. It's considered illegal in Idaho, Nebraska, and Kansas.
“I do think that biggest issue is legislation and the fact that Democrats really can't get anything done," he said. "They're really proving inept, disorganized, and basically stupid at this point ... I just feel like they're botching things like cannabis, which is just a home run.”
That said, Gerber noted that he expects some legislative movement in the next year to either lift the federal prohibition on marijuana or loosen some of the banking restrictions on cannabis companies, which will catalyze the next leg up in the cannabis market.
Grace is an assistant editor for Yahoo Finance and a UX writer for Yahoo products.
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