Marijuana might still be technically illegal at the Federal level, but Netflix (NASDAQ:NFLX) isn't letting that stop it from participating in weed culture. Last month the company released a selection of branded bud to promote a slate of its TV offerings. All strains bore the company's logo on the label, and each was recommended for consumption while watching a particular Netflix show.
The jars of Netflix pot were a one-off publicity stunt to draw attention to one of the shows in particular, a new sitcom called Disjointed set in a California marijuana dispensary. As such, we can hardly expect the company to make the sale of marijuana a regular side business. The move is a harbinger of the future, though; it shows that even at this early stage, marijuana has begun to enter the corporate mainstream.
Not out of joint
Technically, Netflix didn't deal the weed itself -- it's merely the branding party. All 12 offered strains were developed, grown, and sold by a licensed dispensary in the small city of West Hollywood, California. Available only at that outlet, and for a very limited time (a few days around the Disjointed premiere), they nevertheless proved popular -- the dispensary said it sold more than 100 jars.
Netflix doesn't and won't sell marijuana, as do direct-supply Canadian medical pot companies Canopy Growth (NYSE:CGC) and Aphira. Nor does it develop medical treatments using THC and cannaboids, like GW Pharmaceuticals (NASDAQ:GWPH), or provide equipment favored by pot growers, a la Scotts Miracle-Gro (NYSE:SMG). It's using the green only as a marketing device.
But this is significant, not only for what it reveals about current societal attitudes toward marijuana, but as a glimpse of the future.
Only several years ago, few executives would have even considered associating with any controlled substance. Now, a major controlled substance is not only tolerated by the general public, it's essentially accepted. There was little to no outrage over the Netflix bud; the PR stunt was essentially met with a "so what" shrug by the world.
Similarly, it doesn't seem like anyone is picketing the Scotts Miracle-Gro offices, or boycotting GW Pharmaceuticals' THC-based Sativex. Across our northern border, Canadians seem largely untroubled by the activities of Canopy Growth and Aphira.
A smoking market
So, given a green light to harness weed culture in order to rope in customers for a product or service, we can fully expect marijuana to grow deeper roots in corporate America.
The broader pot market is poised to more than triple in size by 2021 from last year's figure, according to a recent analysis. At the moment, there are not enough legitimate pot-associated stocks for investors to take advantage of this, which goes a long way to explaining the S&P 500-beating performance of GW Pharmaceuticals, Aphira, and Canopy Growth shares over the past 12 months.
Given these factors, we can fully expect some corporations will catch the buzz, and figure out ways to associate with "ganja" in the near future.
It'll be quite interesting to see how this develops, not least because it's hard to predict which companies will make the next leaps, and how they'll do it -- perhaps they'll stage a PR stunt like Netflix, or try to push into the equipment segment commanded by Scotts Miracle-Gro. Before news of Disjointed's development was made public, few probably suspected Netflix would get in the mix.
The entertainment purveyor won't become known as a "pot stock." But its brief participation in stoner culture isn't going to be the last time a famous stock market name makes a play with marijuana. Expect other familiar companies to join the party too, one way or another.