Investors who’ve shied away from cannabis out of concern about whether legalization will be good for Canada should consider buying in to help shape the industry and how it operates, say experts in so-called impact investing.
While there’s been no shortage of excitement around pot stocks as the legalization of recreational cannabis use approaches on Oct. 17, uncertainty around issues such as the legal implications around crossing the U.S. border have kept major players out of the game, said Vinay Shandal, managing director of the Boston Consulting Group (BCG) in Toronto.
“You have banks that are refusing to lend into the space in part because the U.S. has a very different regulatory framework for it. The states are all over the place in terms of the degree to which it is or is not permitted, so banks that have business dealing in these markets are being careful,” he said.
Other important investors — including Canada’s big pension funds — may stay away out of concern that legal cannabis poses potential health risks tied to addiction or that it gobbles too much energy.
But they won’t be able to address those issues by holding their noses — or their wallets, said Shandal.
What’s impact investing?
Impact investing is the practice of using investor influence to advance progress on environmental, social and governance matters, hence it’s often referred to as ESG investing.
These kinds of investments exist on a spectrum. Some are only slightly less altruistic than pure philanthropy — for instance, some might invest in low-cost private education in the developing world that nets only a small return but a big sense of purpose.