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Is the current cannabis craze like Tulip Mania?

Is the current cannabis craze like Tulip Mania?

Posted on: 7/31/2018 | Author: ATB Financial's Economics + Research Team

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If you were around in the 17th century, the Netherlands was the place to be. From the early 1600s to the early 1700s, the Dutch had the highest income per capita in the world. This period was known as the Dutch Golden Age.

Much of Europe during this time looked to the Netherlands for trade, science, art and tulips. The tulip, known for its brilliant array of colours, was different from every other flower known to Europe at this time. Strong European demand led Dutch tulip prospectors to create an exchange for the speculative pricing of tulip bulbs and up went prices even though actual bulbs were not being exchanged. Shortly after, in 1637, the price of tulips collapsed.

The world is now after a different kind of plant: cannabis. When it comes to cannabis, Canada is the first large country to legalize the drug (Uruguay was the first country to legalize cannabis back in 2013). Like Dutch tulips in the 17th Century, the world is now focussing on Canada’s cannabis. With legalization happening in October, does cannabis have the same destiny as tulips in the 1700s?

Many Canadian cannabis companies have issued stock and investors have been buzzing about rising share prices. But, cannabis isn’t even legal yet. Like the Dutch tulip exchange, it’s mostly speculation at this point.

While there are are some concerns that there might not be enough cannabis to go around come October and the actual profitability of the new enterprises is still to be determined, demand projections are strong and should put the legal trade on solid footing. Hence, it’s unlikely that the cannabis craze will go the same way as tulips did back in 1637.

Cannabis prices, graph

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