180 Life Sciences (NASDAQ: ATNF) is up 75% this morning on the back of what we call the cannabis delusion. Yes, it’s true, lots of people like cannabis. It’s even true that can be, even will be, lots of interesting products derived from it. This is very different from thinking that investing in a cannabis company is a good idea. Our thought is simply that no one is going to be able to capture the benefit or value added. We’re simply talking about something too prolific, too common, for it to be possible to profit to any great extent. More formally, all the value add will flow through to consumers and while that’s great for civilisation it’s a horror for capitalists and investors.
The latest at 180 Life is: “(“180 Life Sciences” or the “Company”), today announced that an agreement has been reached with Prof. Avi Domb of the Hebrew University, School of Pharmacy, and with Prof. Elyad Davidson, of Hadassah Hospital, to perform a clinical pharmacology (“Pharmacokinetic” or “PK”) study of the uptake of cannabidiol (CBD) in a formulation which can be delivered as a pill orally. The PK study will seek to determine how much CBD is taken up into the blood of volunteers.” Well, OK. CBD does have beneficial effects, that is known. It’s also true that CBD oil can be of varying quality and strength, dosage is difficult. So, in a pill, why not? So, yes, OK, let’s have some tests about whether we can build a pill which still delivers the beneficial effects of CBD. No problems with any of that.
180 Life Sciences stock price from Google Finance
But here’s our problem. We certainly don’t have any global shortage of cannabis. It is, quite literally, ditchweed. Can be grown across large portions of the world. Is grown across large portions etc. Which is why none of the cannabis growing and distribution companies seem to be profit making even with recent legalisation. Sure, having bureaucrats designing markets doesn’t help in the slightest. But to us the real capitalist problem is that there’s no way of restricting competition. If all that is required to produce is a grow light and a closet then it’s going to be very, very, difficult to be able to carve out a profit from either growing or distributing. That’s even before we think of the legal and taxed and illegal and untaxed divide.
We really are pretty sure this extends to CBD derivatives. OK, so they show that accurate dosage can be achieved through pills. Great! Now try to make a profit out of pills that half the world can produce.
So, no, sorry, we don’t rate it.
