Scott Pape

WALLY WRITES: I’ve read that when marijuana was legalised in the US, companies that were in the business of supplying it went from zero to hero very quickly. With talk marijuana will be legalised in Victoria and perhaps other states soon I’m interested in investing in ERI (Erin Resources) and MMJ (MMJ Phytotech) — they’re the companies which recently won the bid to produce it in Australia. Is it possible previous success could be accounted for in the stock price already? I’m taking a year off work next year and want to know if it’s a good short-term investment.
BAREFOOT SAYS: Ah, the dot bong boom. Yes, there’s money to made selling weed. However, both the businesses you’ve mentioned are the equivalent of tiny, speculative mining companies. Take Phytotech as an example: its shares listed at 20c in January, raising $5.9 million. The shares reached a high of 92c that day, before they veged on the couch, played XBox, and ate some nachos. The controversial chief clearly wasn’t smoking enough weed because he went postal on social media, and then abruptly resigned from the company. All within the first week. The shares are now back trading at 30c. If you’re taking a year off, I think it would be smart to steer clear of the weed, and the weed stocks.

Doesn't rate these companies at all.