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Gundlach Forgot about the Intellectual Property Side of Cannabis

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Feb. 27 2019, Updated 3:05 p.m. ET

Intellectual property

Previously, we discussed the several end uses of cannabis being explored by cannabis producers (HMMJ). This value addition and the potential to collect a premium on intellectual property make investing in cannabis companies different than investing in corn.

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Gundlach ignores the intellectual property side

In an interview with Yahoo Finance, Jeffrey Gundlach described cannabis as a commodity like corn, implying that it has no intellectual property potential. However, cannabis producers are developing intellectual property in the form of medical and recreational products, which deserve a premium over commodities.

Partnerships

Cannabis may be the next catalyst for smoking companies. Altria (MO) has latched onto Cronos Group (CRON) with a 45% stake to supplement its slowing cigarette sales. Alcohol companies Constellation Brands and Molson Coors have also partnered with cannabis companies (HMMJ) Canopy Growth (WEED) and HEXO (HEXO), respectively.

It is these partnerships and cannabis’s intellectual property potential that sets it apart from corn. As cannabis becomes increasingly mainstream, it threatens to outpace and even replace traditional products. Next, we’ll conclude this series by discussing why cannabis is not a “mania” like bitcoin.

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