A trillion dollars of shareholder value could be created in a decade as the industry comes out of prohibition, it says. It arrives at that estimate by applying a multiple of three times sales — akin to that of the alcohol, tobacco and pharmaceutical sectors — to a US$350 billion global market, only $15b of which is currently legal.
It argues investors should not be put off by the recent shake-out. There is an opportunity to invest at relatively low valuations.
It has a point there, even if hopes of big, rapid profits are unrealistic. Canada's experience shows illegal sales can undercut legal ones, while low barriers to entry destroy margins.
There is growing recognition of the therapeutic value of cannabis, now legal in more than 40 countries. The UK financial regulator recently opened the door to London listings for those providing products for medical use.
But uptake of medical marijuana is slow. Germany accounts for three-quarters of the western European market, estimated to be worth up to €280m last year. Few doctors feel comfortable prescribing it.
The big potential is in North America, where the distinction between medical and recreational cannabis is blurred.
Shares in the sector jumped after the vice-presidential debate when Kamala Harris said pot would be decriminalised in a Biden administration. Further liberalisation would lift many constraints, including the ability of institutions to invest. Early euphoria has worn off, but the industry could still inspire high hopes of profit.
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