Talking the Business of Cannabis with Green Market Guru Jeff Siegel

From a rocker who lived on the road to sustainable energy expert: The dual lives of Jeff Siegel, publisher and managing editor of Green Chip Stocks, may sound disparate, but the fact that he’s something of a renegade with a rock ‘n’ roll spirit has been a substantial factor in his success. Jeff’s prolific newsletter guides industry insiders and investment novices alike. If you’ve ever been curious about socially conscious investing or the business side of cannabis, he’s the man to read religiously. We had a candid conversation about why legalization is finally a great inexorability, what we can do to combat the war on drugs, and how you can invest wisely in the cannabis space.

How did you make the transition from the rock world to independent expert on green markets?
I’ve been playing music all my life. When I graduated college in 1993, it was a pretty tough job market, so I took a job at a hotel as a bellman. Through that, I met someone who worked at a financial publishing company where they were looking for a customer service rep. I needed a job that paid benefits so I took it. I didn't know the first thing about investing or finance. I was just happy I had a job, but I wanted to be a writer. I read all the investment advisors’ stuff, I’d write for them, I’d volunteer to ghostwrite for them. I learned the ropes.

Around 1998, I had the opportunity to go on tour with this band I was a big fan of at the time, Dog Fashion Disco. They were looking for a keyboard player. I played with them for a couple weeks. Then they flat-out said, “Hey, we're going to go on the road. Do you want to come tour with us?” Within a matter of 24 hours, I’d said yes. I then sold my house, quit my job and jumped in the van. I didn't look back for six years.

As you’re probably aware, musicians don't make a whole lot of money, so I was able to finagle some freelance jobs with the company I used to work for while on the road. Then, in 2005, when I’d decided I didn't want to tour anymore, I had the opportunity to work full-time for another publishing company. It was good money, but I wasn't completely enthusiastic about getting back into the world of financial publishing, especially after being on the road for so long. But my boss told me he’d let me publish my own newsletter about anything I wanted. So I decided to launch a letter focused on socially responsible investing, which at the time was really centered around renewable energy and organic food. Some people weren’t convinced that such a letter, which I called Green Chip Stocks, would sell, but in less than a year it was one of the most successful financial newsletters to come out of that company. There was clearly an appetite for it. I've been doing that since 2005. And a few years ago, I got into the cannabis space because it really aligns with my values, this idea of socially responsible investing.

How so exactly?
When I started writing about cannabis, members of my newsletter were taken aback. They were like, “Well, Idon't understand how this is socially responsible.” Look, for one, there's nothing more socially irresponsible than the war on drugs. The number of innocent lives lost across the globe because of it is a nightmare. The amount of money spent on it is ridiculous. More than a trillion dollars. It’s one of the biggest tragedies to have ever come out of this country. And the truth is, the war on drugs really began, and continues today, as a war against minorities and a war against the poor. That’s always kind of fired me up.

Also, if there's someone who's sick and can benefit from medical marijuana, for anyone to tell that person they can't use that medicine is absurd, especially when you're talking about kids with severe epilepsy or vets with PTSD. So the way I see it, by investing in the companies that can provide real medicine to these folks, we can not only make money, but we can help these people get better and help facilitate the end of the drug war.

You recently published an article entitled “3 Rules for Investing in Cannabis.” What kind of cannabis-related company would you suggest to someone looking to invest in the space?
There are a lot of different opportunities. The cannabis realm is still pretty young. Right now, I'm big on Canada, where there are companies like Canopy Growth Corporation, OrganiGram—an organic grower of cannabis—and Mettrum Health that have been in operation for a while and have been approved by the Canadian government to produce and sell cannabis.

Are there any U.S. companies you would recommend right now?  
The public space is still pretty risky in the U.S., but for accredited investors, private deals do come up quite often. One of my favorites this year was with a company called Hifi Farms. They do organic, craft cultivation. It's a fantastic company run by really smart people. I have no doubt that these folks will be a major force in the next three to five years.

Do you think it's still a bit early to reap a big reward from the space?
It is early, and that's one of the reasons I like it. Certainly there’s always a bit more risk when you get in early on any new opportunity, but that’s also where you get the biggest rewards. But the thing is, this is about much more than just making money. It's about using capitalism and investing as a catalyst for positive change. I really believe strongly in that.

To give you an example of what I’m talking about, back in 2006 or 2007, I wrote up a small clean energy company called US Geothermal. Their stock was trading for about 70 cents at the time. I met with management and checked out where they were going to be putting up their first geothermal power plant. People really responded to the write-up and their stock just took off, from about 70 cents to over a dollar. Not long after that, the company was able to close the necessary funding it needed to build its power plant in Idaho. I know I played a small role in that. Here I am, this random guy in Baltimore, who doesn't want to treat the planet like a toilet and also wants to make money, so I write up this clean energy company, and next thing you know, I’m getting a call from management saying they got the money they needed to build their first power plant. That plant has been operating for the last seven or eight years now, and they're generating clean energy and making money. Early investors were a part of this, and many walked away with gains in excess of 100 percent. The reward comes from doing well by doing good, not to sound too much like a crazy hippie or anything.

It’s inherently logical. What advice would you give an individual who doesn't have very much money but still wants to invest in the cannabis space on a really small scale?
One thing I always tell novice investors is to understand no matter what you invest in, there's always risk. If you can't afford to lose that $500, don't do it. If you want to help the industry in another way, like if you’re a consumer, go to the companies aligned with your values. Or vote. When the votes come up, go out and vote for legalization. And if you’re going to invest, do your research. People do research on everything—their TVs, their cars, whatever it is, but when they go invest their money, too many just trust random Wall Street guys. Let me tell you something: Most random Wall Street guys are scumbags.

That is true.
If you contact the investor relations people at most legitimate cannabis companies with questions, especially those that are publicly traded, they will get back to you. If they don’t, that's not a company you want to invest in. That means they're not interested in your money. For me, that's a big red flag. I won't recommend any company I have not talked to.

That seems so obvious, but it’s something a lot of people, like myself, wouldn’t even think of doing. We’ve made a lot of progress, but a lot of people still seem to be wary of attaching themselves to a cannabis-based company. It’s somewhat surprising to me, that the clichés and stereotypes still exist.
Most people who consume cannabis are working adults, regular people. They're moms, lawyers, doctors, teachers. We don't think twice when people sit down and have a beer or a glass of wine, but since we’ve gone through decades and decades of propaganda, it's hard for a lot of people to shed that mindset.

How long do you think before the majority of other states will follow suit?
I say five years. I don't think it's going to be much longer because no matter what these politicians think about it, it's such a great way to generate tax revenue. Too many politicians are like, “We cannot sleep on this any longer.” When we look at all these polls showing how many people support legalization, it’s always more than 50 percent now.

It seems petty not to support it.
It really does, and as you probably know, if you actually sit down and research why it's illegal, it’s absolutely insane it's lasted this long. The encouraging thing is that the supporters and activists are no longer just the guys with dreadlocks on the corner trying to get you to sign a petition. They’re also guys with million-dollar checks showing up at conferences saying, “I smoke weed every day, and I want to invest in it, and I'm a lawyer,” you know?

There’s definitely a seismic shift taking place.
That's the great thing about cannabis and investing in cannabis. It's not just making a couple of bucks. I'm part of a real revolution that’s happening right now. I talk to a lot of consumers and advocates about investing in these companies, and they get so excited. It’s like, “Wow, I never really thought of this as a way to be a part of this change to really help the legalization movement.”

We can go out, we can picket, we can write letters to our senators and we can vote—all that stuff is very, very important—but at the end of the day, the companies making the money with the connections in Washington and on Wall Street are going to make the big change.

It’s kind of a once-in-a-lifetime opportunity to be a part of something so big. The war on drugs is one of the worst wars in the history of this planet, in terms of lives lost and money spent. I encourage everyone to not just be a bystander, but be a part of it. It’s really a rewarding experience.