Difficult Moral Questions: May I Invest in Cannabis?

Here are a few simple recommendations for ethical investing in stocks, bonds and mutual funds — and how to handle morally problematic industries like cannabis

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Q. I am considering buying some cannabis stocks to make some fast money. I do not smoke; I don't believe in it and I don't promote it. However, I'm thinking about it for a short-term investment. I will not do it if it is a sin. Please let me know what you think. Thank you. —Leslie

A. You say you do not believe in smoking cannabis. I presume you are not referring here to ingesting it for genuinely therapeutic reasons, but rather smoking it to get high (i.e., so-called “recreational pot smoking”)? Further, I presume that what you mean when you say you don’t believe in it is that you think there is something morally wrong with smoking it to get high? I agree. (See my Is It Morally Licit to Smoke Pot?)

Now if you judge it to be wrong, then it’s not only wrong for you, but for others like you. And as it would be wrong for you to consent to it, so too it would be wrong for you to will others to consent to it.

You say you are considering buying stocks in a cannabis company. If generating income is your motive, it means you must be intending the cannabis company to make money.

Now let’s presume for the sake of argument, that this company does not limit itself to selling cannabis for strictly therapeutic reasons (which excludes the pretended therapeutic motives that characterize much of the U.S. cannabis industry as it aggressively lobbies for legalization of recreational possession). It produces and sells pot for recreational use; encourages potential customers to buy and use its products; and opposes initiatives and citizens that would work to limit its liberties to do these things.

So to make money, it must do what you judge to be immoral — namely, to facilitate and encourage recreational pot smoking. And for you to invest in it to make money means you must agree that it does these immoral things, for if it doesn’t do them, and do them successfully, you will not make any money.

In Catholic teaching, contributing to another’s evildoing (in this case, financially, by buying stocks in a company) while agreeing with the evil it does is called formal cooperation. And formal cooperation in evildoing is always wrong.

You therefore should not buy stocks in any cannabis company or other company whose primary means of generating income is wrongful.


What About Mutual Funds?

Unlike stocks, which are shares of ownership in a company, a mutual fund, itself a kind of company, invests in a wide collection — called a portfolio — of stocks and other securities to generate income for its investors. Investors buy shares in the fund, not in the securities themselves. This makes them part owners of the fund, but not owners of the fund’s investments.

Now if a significant proportion of a fund’s investments are in companies that generate their income from actions that are immoral, then you should not invest in it.

But if the fund’s holdings are widely diversified, it could be licit for you to purchase shares in the mutual fund with the intention to generate income from the morally clean businesses and accepting as an unintentional side-effect that a small proportion of the fund’s profits come from tainted income.

If you should find out, however, that the companies with tainted revenues are especially profitable, you’ll need to resist the temptation to make future investing decisions in the light of that fact or to begin to approve the wrongful actions that generate those profits.


Norms for Investing

The question of whether or not to invest, and if so, what percentage of your resources to earmark for investment and what to reserve for promoting other human goods such as giving to the poor is very important, but I will not address it here.

Presuming you have discerned these things rightly, I offer a few simple recommendations for ethical investing:

1. For buying stocks: Investigate what a company does to make money to ensure that its profits are generated in morally upright ways.

2. For buying bonds: Bonds are issued by governments and corporations to generate income for particular purposes; investigate what the bond-issuer intends to do with the money it generates from its bond sales.

3. For buying mutual funds:

  • Investigate the fund’s investment strategy to see whether it’s inclined to favor clean companies or not.
  • Contact the fund’s managers to discuss your commitment to ethical investing; if they express no interest in the question, or evade inquiries of substance about ethical investing, you might consider another mutual fund.
  • You might also consider funds that advertise themselves as committed to “ethical investing,” sometimes called “socially responsible investing.” But be clear what they mean by those terms. Sometimes socially responsible investing means little more than “green” — i.e., environmentally friendly — investing.
  • After purchasing a mutual fund, periodically review its investments and offer input to the fund manager on what you think about those investments.
  • In addition to these simple efforts at due diligence, I do not think you are ordinarily morally required to do additional extensive research on the companies in a fund’s portfolio for your investment decisions to be upright.

4. Other ethically problematic industries (no attempt is made here to be comprehensive):

  • Pharmaceutical: Contraceptive, abortifacient, euthanasia and capital punishment drugs (production, advertising, sales)
  • Biotech: Human embryonic stem cell research; other types of human embryo experimentation; questionable enhancement research (e.g., germ-line gene editing)
  • Fertility: IVF clinics; fertility drug companies; sperm and egg banks; surrogacy placement firms; fertility advertising companies
  • Media: Production companies such as Disney and internet providers such as Netflix and Amazon; these often are purveyors of porn and of movies and shows with manifestly anti-Christian and anti-family agendas
  • Defense: Some defense contractors sell billions of dollars of deadly weapons to the U.S. and other militaries annually
  • Hotel: Some chains are large purveyors of pay-per-view porn. (Note, though, that others have divested themselves of in-room porn: check!)
  • Insurance: Offering benefits for abortions, sterilizations, contraceptives, infertility treatments, sex “reassignment” procedures