Does Swell invest in cannabis?

Nicole Sara Sivens
April 19, 2018
5 min read
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That’s the #1 question that everyone’s asking. We get it: We’re all about high-growth industries and the future of cannabis looks bright.

Cannabis (aka hemp, pot, marijuana) is a supercrop. You can eat the seeds, which are nutrient rich, or make clothes from the stalk, which is durable and workable – all without the psychoactive effects.

Last year, the Hemp Industries Association (HIA) estimated the total retail value of all hemp products sold in the U.S. at $620 million. Sadly, all of the raw hemp materials were imported from other countries. Hemp is an attractive rotation crop for farmers. As it grows, hemp breathes in CO2, detoxifies the soil, and prevents soil erosion. What’s left after harvest breaks down into the soil, providing valuable nutrients.

Each ton of hemp grown represents 1.63 tons of CO2 absorption--that’s an incredible environmental benefit.Hemp requires much less water to grow — and no pesticides — so it is much more environmentally friendly than traditional crops.

We’re always on the hunt for companies that will add value to the world and our investors, and we are uncompromisingly selective. Our team aims to have at least 40 different holdings in any given portfolio, and the unfortunate fact is that there are not 40 high quality, Swell-caliber cannabis firms from which to create an entire portfolio. Currently there are just 15 cannabis companies that are publicly traded.

Cannabis is not only the fastest-growing industry in the U.S., but its statistical rate of growth is unparalleled in U.S. history. Matt Karnes of GreenWave Advisors, a company specializing in cannabis industry analysis, research reports, and consultation, believes every state will have a medical marijuana program within five years: “The pressure will ratchet up and the feds will have to respond to the will of the people. Marijuana likely will trade like any other commodity and someday the U.S. will be exporting cannabis to other countries.”

If we were to hold any cannabis companies in a portfolio, it would most likely be an agricultural or health care themed portfolio. We agree that agriculture represents an enormous opportunity for impact investing, and we are keeping a close eye on the options for building agricultural focused products – including cannabis.

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