The Need for Weed: Role of Investor Attention in The North American Cannabis Industry

My paper analyzes the role that investor attention plays in the North American cannabis industry by conducting an OLS regression with time fixed effects. I use the North American Marijuana Index, comprised of 44 US- and Canada-based companies operating in the industry, as well as individual company stock performance for my dependent variables as a measure of industry performance. Over a period of 221 weeks, starting in January, 2015, I utilize Google Trends data on search frequency of marijuana-related terms as a proxy for information demand and investor attention towards the marijuana industry. I find that certain search terms are significantly related to index and stock performance, correlating with increases and decreases in prices, indicating the heightened role that investor attention plays in this recently legalized and fast growing industry. Politicians, businesses, consumers, and investors alike are all gradually bound by a common trait: the need for weed