California's largest pension fund snapped up shares of the marijuana producer Tilray, despite a ban on tobacco investing
- Institutional investors are slowly getting more comfortable with the emerging marijuana industry.
- CalPERS, one of the largest US pension funds, snapped up a small stake in Tilray, a Canadian marijuana producer.
- That's despite the fund's ban on investing in tobacco stocks, Barron's reports.
The California Public Employees' Retirement System is investing in marijuana stocks.
The pension fund, known as CalPERS, owns 1,617 shares of Tilray, a Canadian marijuana cultivator that listed on the NASDAQ in July.
CalPERS bought the stake despite the fund's ongoing ban on investing in tobacco companies, Barron's reports. The stake, however, is a drop in the bucket for the $300 billion CalPERS: it's worth just over $90,000, as of Friday morning.
The pension fund also owns 587,362 shares of Constellation Brands, the beermaker behind popular brands like Corona and Modelo.
Read more: Sullivan & Cromwell, an elite Wall Street law firm, is working with a Canadian pot company on a $1.8 billion M&A deal. Here's why that's 'momentous' for the marijuana industry.
In August, Constellation paid $4 billion for a 38% stake of Canopy Growth, a publicly traded Canadian marijuana cultivator. The move was cited by many in the financial community as paving the way for institutional investors and Fortune 500 corporations to strategize about how to gain exposure to a sector with lots of risk - and lots of upside.
Tobacco companies are moving into the sector as well. Earlier this month, Altria, the tobacco maker behind popular brands like Marlboro, announced that it intends to invest $1.8 billion for a 45% stake in Cronos Group, a NASDAQ-listed Canadian marijuana cultivator.
Marijuana could become a $194 billion global opportunity if the US and the EU legalize the drug federally, according to some Wall Street analysts. But investing in marijuana - even publicly traded companies - comes with a ton of risk.
The US federal government considers marijuana an illegal, Schedule I drug, though 33 states have legalized the drug for either recreational or medical use.
- Read more:
- Old-school accounting firms are finding the emerging marijuana industry to be an unexpected goldmine - and a minefield
- A top marijuana CPA says the 'bubble will burst' for weed M&A deals
- An early investor in Juul is raising $75 million to make venture investments in pot companies