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Warren Buffett's Investments in Marijuana

March 3, 2017

 (Photo Credit - Fortune Live Media via Flickr)

 

People are familiar with Hip-Hop star Snoop-Dogg's and PayPal founder Peter Thiel's investments in the blossoming cannabis industry, but not so much when it comes to old-school investors like Warren Buffett. Believe it or not, famed investor Warren Buffett's company Berkshire Hathaway has a subsidiary that provides ancillary products to the cannabis industry (and a few other names that benefit less directly from the green rush).

 

Cubic Designs, a unit of Berkshire Hathaway owned MiTek, builds multi level steel structures to increase warehouse capacity. Although their primary clients are industrial companies like Honeywell, Bombardier and UPS, cannabis cultivators saw an opportunity to double their growing square footage using Cubic Designs' expansion systems.
 

It's not easy finding enough grow space given zoning restrictions, local laws and the challenge of finding landlords willing to lease space to growers. Therefore, a product that helps cultivators maximize their existing space is a smart investment on their part.

 

Seeing this demand coming from cannabis growers, Cubic Designs' marketing coordinator, Shannon Salchert saw an opportunity to further expand their business in the space by distributing thousands of these fliers to dispensaries in Colorado, Washington and California.

 

Salchert found that the inherently secretive nature of the marijuana industry made it challenging to reach out to growers directly, but hoped that the flier would make its way to the right people. 

 

We reached out to Shannon to get an update on Cubic Design’s marketing campaign and the impact that legalization in the recent election may have had on their business, but she has not yet responded for comment.


Although Cubic Designs stands to get the most direct benefit from growth in the cannabis industry, lots of other Berkshire Hathaway holdings stand to benefit from the marijuana industry.  

 

Beyond Cubic Designs...


Cannabis related companies including 22nd Century Group (NYSE:XXII), CanniMed Therapeutics (TSX:CMED) and Tilray (owned by cannabis private equity firm, Privateer Holdings) use Berkshire Hathaway owned Business Wire to disseminate press releases and investor updates.

Additionally, "munchies" companies that contributed so much to the initial success of Berkshire under Warren Buffett, will clearly benefit from more people getting the munchies if you know what we mean. Some of these companies include...

  • See's Candies

  • Dairy Queen

  • The Coco-Cola Company

  • Kraft-Heinz

A bit further down the road, Berkshire's holding in John Deere could benefit from the resurgence in American agriculture coming from an industrial hemp cultivation revival. Hemp is significantly more profitable per acre versus the current "cash" crops (corn, wheat and soybeans). This means farmers will theoretically have more money to spend on upgraded tractors and farm equipment from agricultural equipment companies like John Deere.

Upon eventual U.S. Federal legalization, Berkshire Hathaway’s holding in Wells Fargo could benefit from its footprint in states that already have established cannabis industries including Colorado, Washington, Oregon and California. Even though both recreational and medicinal marijuana are currently legal at the state level in all four of these states, Wells Fargo is regulated at the federal level. That being said, Wells Fargo’s exposure to the green rush is still a few years down the road.

 

Conclusion:

 

We hope this article was a helpful guide to the Oracle of Omaha's investments in and around the cannabis industry.

 

For investors that wish to gain exposure to Cubic Designs, Business Wire, John Deere, Dairy Queen and more through Berkshire Hathaway's stock, but find themselves put off by the $263,000 price tag of BRK.A shares, remember that BRK.B shares provide the same exposure at just $175 a piece, making them more accessible to the average investor. 

 

 

Although Berkshire's exposure to the marijuana industry is quite small at the moment, the proportional exposure will increase over time simply because the cannabis space is growing faster than most other industries. 

 

To stay up to date on important marijuana industry news, including news about Cubic Designs, Warren Buffett's other cannabis investments and more be sure to subscribe to our free email newsletter. Also, check out The Daily Marijuana Observer on social media using the links below. 

 

Disclaimer


Investing in nanocap, microcap, and small cap stocks is highly speculative. The publishers of DailyMarijuanaObserver.com are not registered as Investment Advisors or Broker-Dealers in any jurisdiction whatsoever. The information contained on DailyMarijuanaObserver.com (“this site”) has been prepared solely for informational purposes. Nothing on the site is an offer or solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities mentioned from their financial advisor.

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Disclaimer: Except for the historical information and data presented herein, matters discussed in articles on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future performance or achievements expressed or implied by such coverage. Smoke Show Ventures, Inc., which owns The Daily Marijuana Observer, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Smoke Show Ventures, Inc., which owns The Daily Marijuana Observer, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. Before making specific investment decisions, readers should seek their own professional advice and that of their own professional financial adviser. Smoke Show Ventures, Inc. or its affiliates, which owns The Daily Marijuana Observer, may be compensated for its services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.dailymarijuanaobserver.com/legal-disclaimer/.