Israel's Medical Marijuana Market Destined to Crash, Investors Say

Of the many players in the industry, ‘it’s possible that one will be a big, serious company in another 10 years, but I have no doubt that the average will be a total collapse,’ one investment chief says

FILE Photo: A worker at a medical marijuana plantation in Israel.
Reuters

Major Israeli investors believe that the cannabis market is a bubble destined to crash, they said at a conference last week, three months after the country approved the exporting of medical marijuana.

“The cannabis industry is a bubble par excellence, there’s no question,” said Yair Lapidot, co-chief executive and chief investment manager at Yelin Lapidot Investment House, during a panel discussion at the conference.

Gilad Altshuler, co-chief executive of investment house Altshuler Shaham, added, “Of all the cannabis companies, it’s possible that one will be a big, serious company in another 10 years, but I have no doubt that the average will be a total collapse.” He jokingly added: “Institutional investors have already started setting up planters on their roofs.”

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Altshuler added, “If we look at the dot-com bubble, it may have produced companies like Amazon and Google, currently among the world’s largest companies, but investors who invested in the indexes needed something like 20 years to return their full investments.”

Asked what percentage of investors’ portfolios should be invested in Israeli stocks, Altshuler advised only 20%, with the rest in global stocks. “Israel isn’t a third of the global economy,” he said.