Advisors: Say no to drugs

Advisors: Say no to drugs

Advisors: Say no to drugs If you’re thinking about recommending clients invest in the marijuana business, think again, says one lawyer in the know.

“I don’t believe there’s a financial advisor who under their duties can actually suggest that their client invest in the medical marijuana business,” Noted attorney David Welch, in Los Angeles, told Think Advisor magazine last week. “It’s something that has to be done outside of the realm of the financial planner, just because of the risk involved.”

The specific risk Welch is talking about involves marijuana’s illegality on the federal level south of the border while states like Colorado, Washington, Oregon and Alaska have legalized the use of pot for both medical and recreational purposes.

In Canada, while it’s technically possible for each province to decriminalize marijuana use, all of them have chosen to follow the lead of the Harper government and for now, with the exception of medical purposes, its use remains against the law.

Publicly traded medical marijuana manufacturers such as Tweed Marijuana, while potentially tempting investments for clients, should remain just that with advisors doing nothing more than providing due diligence if asked, according to Welch.

The Los Angeles attorney believes Americans interested in investing in marijuana should do so through properties that can be used for other purposes. To him that’s the only legal way to benefit from the pot movement.

At least until it wins full legal acceptance.

“The federal government will eventually allow for the use of medicinal marijuana,” says Welch. “I have not heard of anyone who believes differently. The question is when, and until then, investment in marijuana remains illegal.”

In Canada where the federal Liberals are openly supportive of decriminalizing marijuana, it’s only a matter of time before it happens in the Great White North.

"Within five years," former BC solicitor general and West Vancouver police chief Kash Heed told the CBC in 2014. "And that is a positive thing, because we can now take [those] taxation dollars and put it back into programs such as prevention, education and health care that is so sadly needed here in Canada."

But until then, the caution is, if your client asks, just say “no.”
  • Ross Birney 2015-06-11 10:53:57 AM
    If a stock is trading on a regulated exchange then an individual should be allowed to buy and sell it. The decision as to whether to do so should be based solely on risk tolerance.

    At its essence, a medical marijuana company is no more "risky" than a biotech company who may have its trials disallowed, a junior mining company whose deposits may not materialize, an oil explorer whose well turns out to be a dry hole, or a tech company whose patents are determined to be invalid, etc.

    Our role is to help clients make a reasonable assessment of the level of risk involved in a particular investment decision, not pass moral judgment.
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