Changing Cannabis Trends Offer Investment Opportunities

Photo courtesy of Plantlady223.

The movement to legalize recreational marijuana is growing across the country, and with it is an influx of capital into the industry.

It is twenty years since pot became legal for medical use in California in 1996. Recreational use began in 2012 in Colorado and Washington, and today there are 30 states that allow medical marijuana and nine that either passed recreational initiatives or already have them in effect. This trend is sending a clear message to entrepreneurs and investors, and top Wall Street talent is joining the party.

The legal cannabis industry is now valued at about $8 billion, but it is expected to triple by 2021 in annual sales, to $22.6 billion. If that comes to pass, then the marijuana industry will be substantially larger than the US’s most profitable sports organization. The National Football League had $13 billion in revenue in 2017, and expects to reach $25 billion by 2027.

During 2017 there were at least 27 venture capital investment funds in pot firms. Compare that to 10 similar funds in 2016 and 9 ventures in 2015. The money flowing into the industry is helping pay about 150,000 salaries in the legal weed industry, representing 20% job growth this past year.

Some of the companies are finding exclusive niches, such as Défoncé Chocolatier, founded by Eric Eslao, a company that makes pot-infused artisanal chocolates, which sell for $20 per bar.

This is not to say that there are no hoops that still need to be jumped through. The federal government still views possession of marijuana as a crime, making banks a bit fearful of doing business with cannabis companies. These companies get by with either using cash only or paying large bank fees for the privilege of having accounts.

Ginnie Mae Investigating Churning Used Against Vets and Servicemen and Women

Ginnie Mae, the government-owned corporation which lends money for home purchases to qualified people at more affordable rates, is conducting an investigation into unethical practices involving lenders possibly pressuring veterans and other members of the military into mortgage refinancing which they do not need.

The corporation is able to keep its costs down by guaranteeing repayment on $2 trillion worth of mortgage bonds, even when the borrowers default on the underlying loans. Ginnie Mae is investigating because the securities backed by them support a number of federally sponsored housing projects, including a few which loans are made via the Department of Veterans Affairs.

Ginnie Mae is afraid that some lenders are unethically putting pressure on veterans and military personnel to refinance loans that are part of Ginnie securities. According to Michael Bright, acting president of Ginnie Mae, lenders are pestering consumers relentlessly to try and convince them refinance. This behavior, which is called churning, creates high fees for the lenders and harms the servicemen and women by leaving them with larger loan balances in the end.

Congress is starting to take notice of the practice. Senator Elizabeth Warren, one of the finance industry’s most vocal critics, wrote to Bright, asking him if some of these lenders were abusing the Ginnie Mae program by using strong-man marketing tactics.

Bright answered Warren that he launched a task force to look into churning and any other abusive practices engaged in by lenders who were approved to issue Ginnie Mae-backed bonds. It is possible that the agencies could block the lenders from their programs if they believe restrictions on refinancing can’t be imposed or will not work.

“There are clearly some Ginnie Mae-approved issuer companies who appear to be taking advantage of the VA program to aggressively market and churn loans in our securities,” Bright wrote to Warren.


College Finances: Planning and Budgeting

College students (and their parents) can never start the process of financial planning and budgeting too early.  But for those who have not yet gotten a head start, it is time to take action.

One example of this can be done today.  Fill out the Free Application for Federal Student Aid (FAFSA) for this academic year.  Information entered into this form is used by official government bodies to determine one’s eligibility for fiscal aid.  Another thing to do today is to file the CSS Profile, required by many colleges and scholarship programs for individualized financial aid programs.

On Wednesday, for those in the Connecticut area, Essex Financial Services financial planner, Sean Flynn (a specialist in college financial planning) will be hosting a very useful seminar on the subject.  Located at 25 Main Street at the Cyrenius H. Booth Library, this informative educational seminar is free of charge and open to students and their parents.  The event starts at 7.  For more information on the seminar call 203 426 4533.

A few days ago, Dee-1 (ex-teacher turned hip-hop artist), in conjunction with Sallie Mae, began their six-city national tour promoting planning for college and financial comprehension.  Known as  “Dee-1’s Knowledge for College Tour,” it is hoped that the tour will give students “a good game plan…[adding that] young people need the tools and resources to get on the right track not only to go to college, but also to complete college. The good news is there are free tools and resources out there that can help.”

Do not leave college planning up to chance.  There are numerous free resources available to get you on the right track.  Take them.

Major US Payment Processor Buying UK-based Worldpay

A merger is under way between two rival payment processing firms: the US-based Vantiv and the UK-based Worldpay. Vantiv has submitted a formal offer to purchase Worldpay for close to £8bn ($10.4bn). The offer was made after many weeks of negotiating terms of the deal, including the relocation of UK employees when the merger is implemented.

The deal values Worldpay’s shares at $5.16. When the deal is finalized Worldpay’s headquarters will move to Vantiv’s home, Cincinnati, Ohio, in the USA. As a single entity, the company expects it will be able to process about $1.5 trillion worth of payments and about 40 billion individual transactions per year. This should bring the company’s revenue up to about $3.2 billion/year.

Vitav has grown by leaps and bounds of late, becoming the largest payment processing company in the United States after its acquisition of Mercury Payment Systems and Moneris Solutions. The company is now ready to broaden its base in the European market with the purchase of Worldpay.

Worldpay not only processes traditional payments from brick and mortar shops; they also work in the growing e-commerce space, a market Vantiv would like access to. Due to the huge growth of spending on-line companies that facilitate online payments, like Worldpay, are ripe picks for well-established payment companies as a way for them to reach into the internet marketplace.

Vantiv predicts that the takeover will boost their annual savings to about $200million by the end of the third year. This will be offset against the cost of integrating Worldpay into Vantiv, which is expected to come to about $330 million, almost all over the first two years.

American Economy: Good Growth Records

During Q2 2017 the US economy witnessed some impressive growth; actually the fastest it has encountered in the last two years.  Some of this has been attributed to President Trump since economic growth reached 3% during his first full quarter, marking the highest it has been since Q1 2015, and more than double that of Q1 2017.

This optimistic economic climate has also been attributed to stronger consumer spending as well as better business investment.

The sentiment was echoed by Patricia Buckley recently who wrote: “Healthy employment growth and moderate increases in GDP continue to define the US economy, even as the composition of the labor force evolves.”

Still, while this does indicate cause for positive thinking (with unemployment lower than it has been since 2001, at 4.3%), there is still the matter of the fact that growth is somewhat underwhelming.  For example, while there has been 2-3% of salary increase (above inflation), it’s not great.  And while confidence in CEO and small businesses is high, businesses are not investing as much as they should.

Yes, we’re on the right tracks.  But we’re not out of the woods just yet.


Technology Becomes Major Player in Wealth Management Solutions

Wealth management software solutions are a rising trend as they allow advisors to incorporate customizable technology, automation and vast amount of data into their personal practices. Though initially met with some hesitation, these services are expected to set a new bar for the industry; Morgan Stanley is planning to provide 16,000 advisors with trade-generating computer algorithms by the end of the year.

A pilot program is already in place this month, with 500 Morgan Stanley advisors set to start working with the new technology to combine their skills with those of a computer. According to a Bloomberg article, “The thinking is that humans with algorithmic assistants will be a better solution for wealthy families than mere software allocating assets for the masses.”

Numerous advisory firms have already begun taking up digital wealth management services. Take the Black Diamond Wealth Management Platform, for example, which hit its 1,000 client milestone earlier this year. Providing financial services software and compatible devices to over 1,000 firms with more than $600 billion in assets combined, Black Diamond offers technology-based solutions for services ranging from portfolio management to instant communication with clients.

Essex Financial Services, based in Essex, Connecticut, is one such firm. With a focus on its RIA business, Essex Financial utilizes a range of digital services such as Money Guide Pro, eMoney and an overlay for CRM. “We can handle a broad range of client situations, from the fairly routine retirement planning and college funding aspects, all the way up to the unique needs for intergenerational wealth transfer and legacy planning of high net worth clients,” explains Essex Financial President and CEO Charles “Chuck” Cumello. “We are spread out in multiple locations, so having a platform like Black Diamond provides the critical pieces we need to efficiently deliver advice, whether that is through the client portal, document vault and even on iPads for in-person meetings. All of those pieces combined gives us a tremendous solution.”

He adds: “The future is going to be everything mobile-oriented, maybe not for today’s clients, but for their children and grandchildren. Staying on top of these things is much better when you have a partner who continues to innovate for you.”

Industrial to Information Age: The Move

At first glance it appears that we are 100% integrated in the age of technology.  On closer examination however, Nadeem Shaikh writes in Harvard Business Review that we are actually faced with a widening of the “gap between technological and organizational progress.”

We must ensure that – as a community of forward-thinking individuals – we are embracing a more digital approach, shifting our focus in that area in all industries.  Ignoring signals due to concerns over short-term profits is not only futile, but could ultimately “cause negative ripples throughout broader capital markets.”

Thankfully ID Finance seems to have taken this on board.  The digital finance firm recently created a self-learning chatbot for MoneyMan, its online lending platform serving customers in Spain, Georgia, Russia, Poland, Kazakhstan and most recently Brazil.  In just a few short weeks more than a third of their customer requests were being processed automatically through the chatbot.  The way it works is by engaging new clients at the loan application stage and with registered users when they log in to their personal account, thereafter finding the data needed to ascertain loan eligibility, as well as offering recommendations of relevant products tailored to the individual’s requirements and financial prudence.

Meanwhile for those in the New York area earlier this month, the  In|Vest 2017 conference was well worth attending.  A perspective was provided on upcoming digital trends and strategies on wealth management and was invaluable for those in the fintech industry.  There were networking opportunities as well as demos and breakout sessions.

Ultimately the message we are hearing is to not let things go on ahead of us; get involved and get learning about digital upgrades.

West Lake Landfill: Separating Fact from Fiction

In the 1940s the United States was working hard to develop an atomic bomb at the end of World War II. One of the unfortunate by-products of nuclear research and development is radioactive waste. Much of that waste was disposed of in the West Lake Landfill 43 years ago.

As awareness of the dangers of radioactivity has increased in the intervening decades since the waste was dumped in the West Lake Landfill, but along with that awareness fear has also grown, often overblown and unwarranted.

Experts on radiation who have examined the West Lake Landfill say that the risks associated with the tiny amounts of gamma rays that are emitted are acceptable, similar to the risks of driving.

“All of this would be well within what we give people for medical procedures,” said Sasa Mutic, director of radiation oncology physics at Washington University School of Medicine. “At this level, there are many other things that are much riskier.”

The following video examines some myths and facts concerning the West Lake Landfill.

For more information please go to this article: Misplaced Fears?

Parents Paying Less for Kids College Fees

Nassau Hall, the original building and current administration building of Princeton University. Photo courtesy of Wikipedia.

Despite an improved economy and record-high stock market, parents are chipping in less for their kids’ college tuition than they have in the past.

That is according to a new study published by Sallie Mae, “How America Pays for College,” its tenth annual report.

Parents’ share of the tab for college fell to 23 percent, down from 29 percent of the average amount an ordinary family pays for college. In dollars that comes to $5,527 out of an average $23,757 yearly cost.

That number is the lowest its been since 2009, the smallest figure since the launch of the yearly study.

So where is the rest of the money for higher education coming from? Student loans have climbed to pay for 19 percent of the cost, compared to 13 percent in the past. The Sallie Mae report does not address the reasons for the changes, but there is some speculation.

“It could be price sensitivity,” says Mark Kantrowitz, publisher of, a college financing resource. “Parents may be telling students, if you want to go to that more expensive school, you’ll have to pay for it.”

Sallie Mae’s population seems to be lacking in planning ahead for college fees. The report reveals that 9 out of 10 respondents expect their kids to go to college, but only 4 of 10 budget for it.

There was some good news in the study. The report showed that 69 percent disregarded some colleges from their list under consideration because of the high price, a number significantly higher than the 58 percent of ten years ago.

Clearly, families that did plan for college for their kids, with savings plans like the 529 plan, getting to college is less troublesome.

Parents who save a little bit each month over time have a reasonable, fixed amount available to spend on college. If their kids want to spend more, then they will have to face larger loans when they graduate.

Ford Launching New Financing Scheme to Attract Young Drivers

Ford Motor Company will begin to offer a new type of car purchasing plan which will be a kind of middle ground between a traditional car finance program and a car hire agreement, which could be a model for the way cars will be purchased in the future.

The car manufacturing giant will start offering finance deals for as short a term as one month to buyers in the US who are not interested, or cannot afford longer, yearly leases. The “variable-term leases with flexible payment options” will combine maintenance, insurance and towing services into one monthly premium which can either be renewed or opted out of each month.

The hi-tech company Canvas will run the program, but Ford’s US consumer financial credit provider Ford Motor Credit, will back up the scheme. David McClelland, executive vice president of marketing and sales at Ford Motor Credit said his company “recognized the need for financial services and technology to facilitate our future vision.”

Canvas, formerly Breeze, was purchased by Ford at the end of 2016. The tech company is expert in providing short-term vehicle finance to drivers working for Lyft, Uber and others. Ford is using Canvas’s web-based platform, as well as their familiarity with short-term leasing, to attract a broader range of customers. The program is hoping to attract young drivers, especially those who would otherwise not be eligible for auto financing.

CEO of Canvas, Ned Ryan said, “Our mission is to identify, test and launch financial products that meet the changing needs of consumers. We’re addressing the void in the consumer space between daily rentals and long-term (financial) commitments.”