switzerlanden
Cannabis – controversial plant comes full-circle

Cannabis – controversial plant comes full-circle

25-05-2021 | Insight
Cannabis is making a comeback and enjoying popularity and acceptance it hasn’t seen in thousands of years – but caution is advised.
  • Peter van der Werf
    Peter
    van der Werf
    Engagement Specialist

Speed read

  • Cannabis has been legalized in a number of developed countries across the globe
  • Robeco takes a positive view of investments in cannabis as a carefully controlled medical therapy
  • Robeco exclusion policy will limit investments in recreational cannabis producers and retailers

Commercial history and legal comeback

Cannabis is no stranger to medicine or commerce. Its origins date as far back as 8000 BC when hemp (a part of the Cannabis plant) was first documented as a domesticated plant. Since then, its fibers have been used for rope and within textiles and its seeds as a source of nutrition and food. The ancients were also quick to recognize its medicinal properties. It has been used throughout the centuries for treating pain and inflammation as well as diarrhea and other digestive issues.

In modern times, cannabis, or its alternate alias, marijuana, has been more closely associated with recreational drug use, but its medicinal properties are also increasingly recognized and its medical use on the rise. Even before Canada became the first industrialized country to legalize adult-use of cannabis back in 2018, cannabis was enjoying a strong run. Many US states began to legalize medical marijuana use already in the 1990s and were joined by many other US states and EU countries in the decades that followed. Cannabis is now legal in 33 US states and most EU countries allow or are considering the medical use of chemical compounds called cannabinoids derived from cannabis plants.

Climate Series – don’t miss a thing
Climate Series – don’t miss a thing
Subscribe

Medical use and business markets

When medically prescribed, cannabis is most commonly used to control pain as well as a myriad of other therapies including epilepsy, multiple sclerosis, Parkinson’s disease, depression, diabetes and a host of other neurological and digestive tract disorders. Adverse side effects include dependence, neurological impairment, and other chronic diseases, but research suggests that health risks are much less than those associated with other legal substances like alcohol and opiates.

Given its medical efficacy, pharmaceutical companies are taking advantage of a more relaxed legal environment to conduct research into cannabis-related treatments that can be easily swallowed, rubbed or inhaled rather than smoked. Moreover, given a growing perception that cannabis consumption is safer than alcohol, the beverage industry is also taking note and partnering with cannabis producers to develop drinks especially for more health-conscious market segments.

Legal marijuana sales exceeded USD 21 billion globally in 2020 according to BDSA, a US-based cannabis data analytics provider1. And the US cannabis beverage market is expected to expand ten-fold to USD 374 million by 2022. Cannabis companies have also entered the financial mainstream. Wall Street welcomed its first marijuana IPO by a Canadian cannabis producer already in 2018. Moreover, according to Viridian, a financial advisory firm, in the first quarter of 2021 cannabis companies raised nearly USD 4.3 billion in debt and equity2.

Medical promise and recreational risks

Given the growing medical evidence, legislative approval, and social acceptance of cannabis as a treatment tool, Robeco is predominantly positive towards the development of cannabis-related medical products. However, given existing uncertainties surrounding adverse health effects of cannabis use in unmonitored settings, it cautions investments in companies that generate revenues of 5% or more from recreational cannabis production as well as companies that generate revenues of 10% or more from recreational cannabis retail products.

Moreover, Robeco’s Active Ownership Team will engage with individual companies to address and monitor potential sustainability risks and their impact on performance.

1 “Cannabis reignites corporate interests as it edges towards mainstream.” Financial Times, April 4, 2021. https://www.ft.com/content/f52b8bd9-867a-46ad-9808-d5d3afce739e
2 “Wall Street welcomes first marijuana IPO.” Financial Times, July 19, 2018. https://www.ft.com/content/0e19b2a6-8b28-11e8-bf9e-8771d5404543

Logo

Disclaimer Robeco Switzerland Ltd.

The information contained on these pages is for marketing purposes and solely intended for Qualified Investors in accordance with the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”) domiciled in Switzerland, Professional Clients in accordance with Annex II of the Markets in Financial Instruments Directive II (“MiFID II”) domiciled in the European Union und European Economic Area with a license to distribute / promote financial instruments in such capacity or herewith requesting respective information on products and services in their capacity as Professional Clients. 

The Funds are domiciled in Luxembourg and The Netherlands. ACOLIN Fund Services AG, postal address: Affolternstrasse 56, 8050 Zürich, acts as the Swiss representative of the Fund(s). UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, postal address: Europastrasse 2, P.O. Box, CH-8152 Opfikon, acts as the Swiss paying agent. The prospectus, the Key Investor Information Documents (KIIDs), the articles of association, the annual and semi-annual reports of the Fund(s) may be obtained, on simple request and free of charge, at the office of the Swiss representative ACOLIN Fund Services AG. The prospectuses are also available via the website www.robeco.ch. Some funds about which information is shown on these pages may fall outside the scope of the Swiss Collective Investment Schemes Act of 26 June 2006 (“CISA”) and therefore do not (need to) have a license from or registration with the Swiss Financial Market Supervisory Authority (FINMA). 

Some funds about which information is shown on this website may not be available in your domicile country. Please check the registration status in your respective domicile country. To view the RobecoSwitzerland Ltd. products that are registered/available in your country, please go to the respective Fund Selector, which can be found on this website and select your country of domicile. 

Neither information nor any opinion expressed on this website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco Switzerland Ltd. product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports. 

By clicking “I agree” you confirm that you/the company you represent falls under one of the above-mentioned categories of addressees and that you have read, understood and accept the terms of use for this website.

I Disagree