Japan's $103 million pot stock hypocrisy unmasked

If you condemn the use of cannabis, should you invest in it? We look at the Japanese government pension fund's pot stock holdings.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you're travelling from Canada, Holland, certain US states, or any other parts of the world where recreational cannabis use has been legalised, step carefully if you plan to visit Japan.

Japanese courts continue to enforce strict laws surrounding the use of cannabis, which can see an offender sent to prison for up to 5 years for personal use.

Of more concern to international travellers who may have consumed marijuana in a legal jurisdiction outside Japan, earlier this year, the Japanese government debated making it a crime for people to have THC inside their bloodstream.

Fair warning Tokyo residents, you may want to steer clear of Amsterdam once COVID travel restrictions are lifted.

A male ASX investor wearing glasses and a beanie and denim shirt puts his hand to his chin wondering whether to buy ASX shares

Image source: Getty Images

Japanese government's pot stock hypocrisy

If a national government condemns the use of cannabis, should it invest in pot stocks?

While the principled answer appears to be 'no', that hasn't stopped Japan's Government Pension Investment Fund from snapping up some US$80 million (AU$103 million) worth of shares in 3 cannabis companies trading on Canada's Ontario stock exchange.

As Bloomberg reports:

Financial disclosures show Japan's Government Pension Investment Fund (GPIF) accumulated stakes totaling some $80 million in at least three pot companies.

With 1.7 million shares of Canopy Growth Corp, which trades on the Ontario stock exchange under the ticker WEED, the fund would be among the top 12 holders of the recreational marijuana dealer.

Now granted, US$80 million is just a tiny fraction of the Japanese Government Pension Investment Fund's US$1.6 trillion in assets.

But still.

So why the seeming hypocrisy?

According to the government pension fund's spokeswoman Nao Honda, "We are dedicated solely to ensuring long-term returns for our members."

Gotcha. Show me the money!

Now the Japanese Government Pension Fund hasn't invested in any ASX listed pot stocks. At least not yet. But there are a growing number of them blooming on the ASX. (Sorry, couldn't resist.)

Two leading ASX pot stocks

There are a number of cannabis companies listed on the ASX.

Some are focused on hemp production, which produces no THC. That's the compound in cannabis that gives users the 'high'.

Others are primarily focused on medicinal marijuana, which has the green light in Australia. And still others are involved in the recreational side of cannabis use in the legal markets, such as Canada.

Cann Group Ltd (ASX: CAN), for example, cultivates cannabis for both medicinal and research purposes. At the current price of 59 cents per share, Cann Group has a market cap of $162 million. The Cann Group share price closed at 59 cents today, up 1.72% in intraday trading today and down 1.7% in 2021.

Creso Pharma Ltd (ASX: CPH) develops pharmaceutical-grade cannabis and hemp-based products to treat human and animal health issues. Creso has finished the day's trading at 22 cents per share, giving it a market cap of $215 million. The Creso Pharma share price is down 4% at the time of writing and up 22% year-to-date.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ASX Share Market News

Businessman looks with one eye through magnifying glass.
ASX Share Market News

Reporting season starts next week. Here are the ASX shares to watch

Two heavyweights open their books in August.

Read more »

Warren Buffett
ASX Share Market News

Would Warren Buffett buy Soul Patts shares?

Would one of the world’s greatest investors be interested in this stock?

Read more »

Devastated man with his head on his office desk with paperwork and a laptop.
ASX Share Market News

These are the 10 most shorted ASX shares

Short sellers have their eyes on these shares.

Read more »

Man pointing at a blue rising share price graph.
Broker Notes

Why this promising ASX All Ords gold stock is forecast to more than triple your money

A leading broker tips some major upside for this growing ASX gold miner.

Read more »

Happy young woman saving money in a piggy bank.
ASX Share Market News

This new savings account is promising a hefty 6% return, with some strings attached

Savers can get rates better than term deposits.

Read more »

A female sharemarket analyst with red hair and wearing glasses looks at her computer screen watching share price movements.
ASX Share Market News

5 things to watch on the ASX 200 on Tuesday

Will the market be able to follow up yesterday's strong gain with another good session?

Read more »

A panel of four judges hold up cards all showing the perfect score of ten out of ten
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy start to the trading week for investors this Monday.

Read more »

graphic image of a crown dropping on its side and shattering
ASX Share Market News

Game on! CBA shares tighten the race with BHP for biggest ASX stock crown

CBA shares are back in the race with BHP for the biggest ASX stock title.

Read more »