On April 20, also known as 4/20, or “Weed Day,” three years ago, recreational marijuana was illegal in all but just two states: Colorado and Washington. If an investor had taken a risky bet then on the nascent—and then largely taboo—industry’s growth and invested indiscriminately in a wide range of marijuana stocks, they would have, well, smoked the stock market.
Investors are more likely to buy marijuana stocks around the unofficial 4/20 holiday, according to data from investing app Robinhood. And those investors who bought 10 U.S. cannabis stocks back in 2014 would have reaped a 32% return on their portfolio—beating the S&P 500’s 25% jump, Trump Bump rally and all, in the same period. Had investors just picked the top-performing weed stock over that period, though, they could have made a return of more than 4200%.
The basket of stocks includes the 10 U.S.-listed companies in the Marijuana International Corporation’s U.S. Marijuana Index that were already publicly traded three years ago. The companies range widely from pharmaceutical companies to e-cigarette makers and agriculture companies. Underscoring the risks of this particular crop of stocks, only one is traded on a major U.S. stock exchange, while the others are so-called penny stocks, available only on the less regulated and more opaque over-the-counter markets.
On the list are GW Pharmaceuticals (gwph) (which is listed on the Nasdaq), Axim Biotechnologies, Cannabics Pharmaceuticals, Terra Tech (trtc), Cannabis Sativa, mCig, United Cannabis, General Cannabis (cann), Surna (srna), and CV Sciences. Of those, the big winner over the last three years was Cannabics Pharmaceuticals, a Maryland-based company developing cancer treatments using derivatives of the cannabis plant. Cannabics’ stock has returned 4260% in that time.
Increasingly, growth-seeking investors have looked toward cannabis stocks as the next big thing in recent years, with industry bulls betting on marijuana’s legalization to unleash pent-up demand. After weed was stigmatized for decades during of the “War on Drugs” that started in the 1970s, newer studies have shown marijuana to be potentially less harmful than alcohol. Moreover, cannabis-based companies have also tapped into the health industry, with professionals starting to prescribe medical marijuana for a wide range of conditions and treatments. Sales of legal marijuana were expected to reach $6.7 billion in 2016.
And investments in weed tend to crescendo around 4/20 each year. Robinhood’s investors are 20% more bullish on marijuana stocks leading up to the date than at any other time, according to the company’s data scientist Sahill Poddar. Meanwhile, roughly 35% of the app’s users who buy marijuana stocks are first-time traders—suggesting they joined just to invest in weed.
That bullishness is perhaps part of the reason why those 10 marijuana stocks have gained a net $1.1 billion in market value over the past three years. In the year since last “national weed day” alone, the U.S. Marijuana Index, which now includes a total of 20 companies, returned 48%, quadruple the gain of the S&P 500. There is even a marijuana ETF, though it is only available in Canada.
Still, despite impressive returns by a few cannabis stocks, there were even more on the flip side: Six out of the 10 stocks actually lost money for investors over the past three years.
While the industry based on getting high also has the potential to deliver high rewards, it’s also highly risky. The pharmaceutical effects of cannabis are still not fully understood. And in nearly half of the U.S. states, marijuana is still illegal, even though Americans have steadily become supportive of its legalization. Illustrating the make-or-break nature of the industry, two stocks of the original 10 that were trading three years ago have since lost more than 90% of their value.
But if you’re going to invest in weed stocks, there’s no particular reason to do so on 4/20—though the blitz of media coverage of marijuana around that time probably encourages investors to look at the industry, says Khurram Malik, who researches cannabis investments for Toronto-based Jacob Capital Management. Or investors may be inspired after seeing a lot more marijuana use during 4/20, not unlike how retail investors base trading decisions on the level of gift-buying during the holidays.
“It’s our version of Christmas,” Malik joked.