Investor eyes cannabis, but not THC

As the cannabis movement becomes more mainstream, one investor is looking to bring more legitimacy and credibility to the once-taboo industry.

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“I am trying to find interesting disruptive companies that I think will legitimize the industry and really be mainstream in the years to come,” Evolution Corporate Advisors founder Gregg Smith told FOX Business’ Stuart Varney on “Varney & Co.” on Tuesday.

Currently nine states have legalized cannabis for adult-recreational use and 30 states use it for medicinal purposes. Smith is banking on “tax envy from other states” to continue a trend going towards national legalization and expects that it could have significant economic and financial implications.

“Right now there’s a lot of barriers to entry but I think there’s a lot of money to be made within the cannabis space,” he said.

The legalization of recreational marijuana in Canada has allowed many U.S. companies to list in their stock market, he said, but it’s also getting easier to invest in the emerging industry on the home front.

“We are just starting to witness the first listings on the Nasdaq markets here in the states as we are seeing the markets sort of loosen up and become more accepting of cannabis companies trading here,” he said.

Smith is looking to invest in businesses that will have liquidity, an exit strategy, and stay away from tetrahydrocannabinol, commonly known as THC, the substance primarily responsible for psychoactive effects of cannabis.

One company that has caught his attention and is capitalizing on the trend of “digital smoking” without even touching THC is PAX labs. They design and manufacture vaporization devices for use with cannabis.

“They sell a beautiful consumer tech product and they sell an empty pod so I would fancy them,” he said and he added that they’ve also received financial backing from Boston-based mutual funds Fidelity Investments.

“To me that sends the right signals that this company could have a proper liquidity event,” Smith added.