Does this fast-growing industry fit within financial planning? It’s complicated.

Notwithstanding the pros and cons of medical marijuana, the legalization of cannabis for recreational use may be hazardous to your wealth. And then again, maybe it will help you reach new (investment) highs.

Still illegal under federal law, attitudes toward marijuana use are clearly softening. It is now the most widely consumed drug in the country – a survey from Marist College estimated that nearly 55 million adults currently use marijuana and more than half of American adults have tried marijuana at least once in their lives.

Want more proof that marijuana use is going mainstream? Consider this:

Close to 35 million are regular users – meaning at least twice a month
56% of Americans say that using marijuana is socially acceptable
52% of the country’s 55 million pot users are millennials

So, given its wide use in society, perhaps we should view pot through a financial planning lens.

Bad Habits Lead to Bad Financial Planning

The ultimate goal of financial planning is “financial independence.” Unless you win the lottery or inherit a boatload of money, financial freedom is based on earning power, saving and investing, and the prudent use of debt. Can a few casual edibles a week harm earning power?

Retired nationally syndicated talk show host Neal Boortz once said, “Most people are poor because they continue to do the things that make them poor.”

Harsh? Maybe. Especially since some people suffer financially due to unforeseen circumstances. But by and large, Boortz had a point: bad habits are often a major contributor to income inequality.

A report in The Weekly Standard magazine indicated that the strongest supporters of marijuana legalization are males ages 18-29. Given increasing use of the drug by adolescents and young adults, medical schools at Northwestern University and Harvard University, plus Massachusetts General Hospital, teamed up to study the impact of tetrahydrocannabinol (THC), the mind-altering ingredient found in marijuana, on young minds. Published in the Journal of Neuroscience, the study is a wake-up call for parents and persons charting a career path.

Debunking the trendy idea that casual use of weed is not a problem, the study showed major brain changes, notably abnormalities in cerebral regions critical to emotion and motivation. If you are emotionally less stable and lack motivation, will employers be thrilled?

In his 1966 song, Rainy Day Woman #12 & 35, Bob Dylan proclaimed, “Everybody must get stoned.” As noted in the study, the THC content of pot then was 1% to 3%. In the early 1990s, the average THC content was about 4% percent; in 2013 it was almost 10% and today the average marijuana extract contains over 50% THC, with some samples exceeding 80%.

Something to think about.

But Marijuana is Big Business

As investors try to determine which industry is poised for above-average growth relative to other industries and the overall market, they woud be hard-pressed to find an industry growing faster than the marijuana industry. Consider these statistics and predictions:

According to cannabis research firm ArcView, the legal marijuana industry grew to $8 billion in sales in 2017, up from $7 billion a year earlier
The industry is expected to generate $17 billion in revenue and $745 million in state tax revenue in 2017
By 2025, the industry is expected to create 300,000 jobs
Investment banking-firm Cowen & Co. predicts legal sales will reach $50 billion by 2026, representing a compound annual growth rate of more than 23% per year over the next decade (and reach $75 billion by 2030)

Coca-Cola is in discussions with Aurora Cannabis to develop soda infused marijuana
The market for marijuana could eventually eclipse soda sales – which is declining and was approximately $75 billion last year

What Does This All Mean?

As with most things financial-related, it is impossible to give blanket advice that will allow everyone to sleep better at night. That being said, it’s worth taking precautions when deciding whether to consume marijuana, no matter your age.

And it’s also worth paying attention to this growing industry as much as we pay attention to other industries, like health care, technology, construction, and agriculture, among others. Because there are more than 63,000 publicly traded companies in the world, categorized into 11 sectors, divided again into 24 industry groups, refined further into 68 industries, and then grouped into 157 sub-industries.

In other words, don’t let Mary Jane cause you to forget all about diversification.