High Finance

The Wall Street Journal recently estimated that the 40 publicly traded companies that make up MarijuanaIndex.org have a total market capitalization of $4 billion. Yes, there is such a thing as MarijuanaIndex.org. The companies in question sell marijuana to consumers, but they also develop products or services with a marijuana component. Their market focus is both medical and recreational.

People who work in this burgeoning field recently convened in Denver for something called the “Cannabis Business Summit.” Twelve hundred people attended. They heard presentations such as, “Paying Your (Un)Fair Share: The IRS, 280E, and Keeping Your Business Tax-Compliant.” Clearly, this thing is big and getting bigger. As more and more states relax their marijuana laws, it is certain that the industry will continue to grow at a rapid pace. What, then, is the impact of increased marijuana use on American life in general?

“I want to know in advance how much reefer the folks handling my 401(k) are smoking. In fact, I want it right there in the annual report.”

Perhaps the most important issue is corporate transparency. In other words, who is using marijuana—and when? The consumer has a right to know. Not everyone is okay with having his or her life savings managed by a stoner, even if the broker or fund manager is only having a short toke at lunchtime. For example, if a mutual fund company is based in a state where recreational drug use is allowed, and perhaps even rampant, investors have a right to know this.

Some investors, citing their own moral and ethical principles, will pull their money out of a fund that invests in companies that either sell marijuana or allow employees to use it. Other investors will simply want to know if anyone making trades at the mutual fund is a regular marijuana user himself.

“I don’t mind my fund manager smoking a little weed if he’s mostly handling blue-chip stocks,” says a Rhode Island investor. “That kind of fund tends to manage itself. But if he’s managing an emerging world-growth-and-income bond fund, that’s a whole different cup of tea. Smoke a couple of joints and you might nod off when the Fed finally decides to raise rates. The result: catastrophe. So I want to know in advance how much reefer the folks handling my 401(k) are smoking. In fact, I want it right there in the annual report.”

In states countenancing drug use, companies may soon feel pressure to disclose how many of their employees use marijuana for recreational purposes, even if they are not necessarily lighting up in the workplace. This is particularly relevant in areas such as order fulfillment and customer service. “People whose computers have gone on the fritz want to deal with a technician who has his wits about him, not some laid-back stoner,” says a Florida entrepreneur who sells refurbished tablets to cash-strapped seniors. “I’m not saying that there isn’t a place in this society for laid-back stoners— burger joints, tattoo parlors, nightclubs, the post office—but they shouldn’t be helping customers repair their PCs over the phone. The last thing a customer with a dud server wants to hear is ‘Don’t worry; be happy.’”

One subject that has not received enough attention to date is the presence of marijuana users on corporate boards. Should boards identify the marijuana users on the board? How about martini users? What percentage of a board can consist of active marijuana users before things start to get out of hand? “Recreational marijuana users tend to be patient, low key [and] maybe even a bit passive,” says the CEO of a major weapons-systems manufacturer. “I’m not sure that’s the type of individual we want on our board.”

Others disagree. “Marijuana users are less likely to rush to judgment than your classic red-meat-eating Type As,” says the CEO of a small Kentucky firm that makes plush toys. “In our business, we like to have a few people on board who can slow things down [and] encourage everyone to stop and smell the roses.”

Are there industries where recreational marijuana use is still verboten, even if local laws permit it? “Obviously, police, bail bondsmen and repo men are discouraged from using marijuana in the workplace,” says the head of a Los Angeles private-security firm. “But rampant marijuana use obviously hasn’t hurt the film industry. Wait a minute: Ticket sales are down 6.6 percent this year. Maybe folks in Hollywood need to lay off pot for a while.”

Joe Queenan :Joe Queenan is a regular contributor on business issues, corporate culture, and financial follies to Barron's and The Wall Street Journal.