Going to Pot Financially

Notwithstanding the pros and cons of medical marijuana, the legalization of cannabis for recreational use may be hazardous to health – and wealth.

Still illegal under federal law, attitudes toward marijuana use are softening. It is now the most widely consumed drug in the country, with an estimated 15.2 million users. A recent report from the National Institute on Drug Abuse indicated that, in 2013, 12.7% of 8th and 12th graders had tried marijuana in the past year.

But given its wide use in society, perhaps we should view pot through a financial planning lens.

The ultimate goal of financial planning is “financial independence.” Unless you win the lottery or inherit a boatload of money, financial freedom is based on earning power, saving and investing, and the prudent use of debt. Can a few casual joints a week harm earning power?

Retired nationally syndicated talk show host Neal Boortz once said, “Most people are poor because they continue to do the things that make them poor.” Harsh, maybe: Some people suffer financially due to unforeseen circumstances. But by and large, Boortz had a point. Bad habits are a major cause of income inequality, the latest cause célèbre in political circles.

A recent report in The Weekly Standard magazine indicated that the strongest supporters of marijuana legalization are males ages 18-29. Given increasing use of the drug by adolescents and young adults, medical schools at Northwestern University and Harvard University, plus Massachusetts General Hospital, teamed up to study the impact of tetrahydrocannabinol (THC), the mind-altering ingredient found in marijuana, on young minds. Published in the April 16 issue of the Journal of Neuroscience, the study is a wake-up call for parents and persons charting a career path.

Debunking the trendy idea that casual use of weed is not a problem, the study showed major brain changes, notably abnormalities in cerebral regions critical to emotion and motivation. If you are emotionally less stable and lack motivation, will employers be thrilled?

In his 1966 song Rainy Day Woman #12 & 35, Bob Dylan proclaimed, “Everybody must get stoned.” Since the 1960s and 1970s, singers portrayed stoners as colorful folk heroes. As noted in the study, the THC content of pot then was 1% to 3%; now it ranges from 5% to 9%.

If someone urges, “Hey, try this, it’ll re-wire your brain,” will that enhance future success? Which would you rather feature in your profile, an advanced degree in computational science and engineering, or a Facebook picture of you getting baked on a joint?

Aside from the cost of pot, marijuana use worries insurance underwriters. As a future or current spouse or parent, life, health and disability insurance is important to your financial security, and that of loved ones.

Jeff Root, writing in National Underwriter Life & Health (April 2014), notes that smoke, whether from tobacco or marijuana, causes a number of negative health complications: “As a general rule, insurers assume all forms of smoking are harmful unless scientifically proven otherwise.”

Smoker rates can be substantially higher than non-smoker rates. If you misrepresent the use of tobacco or any drug on an insurance application, the carrier may deny your claim. THC can show up in a urine sample up to six weeks after use. Companies that demand physically able and mentally sharp employees often complain that they cannot find enough candidates who can pass a drug test.

Parents consult financial planners about tax-wise strategies to fund educations. Whether in a trade school or college, education is key to solving income disparities in our knowledge-based world. Do not make assumptions, “my child will not do drugs,” or if he or she does a little bit of marijuana, “no harm, no foul.”

Parents and students: You are investing substantial dollars and energy in education and grooming for future career success. Don’t let Mary Jane blow career prospects “up in smoke.”

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Lewis Walker, CFP, is president of Walker Capital Management LLC, Peachtree Corners, Ga. Securities and certain advisory services offered through the Strategic Financial Alliance Inc. (SFA). Lewis Walker is a registered representative of SFA, which is otherwise unaffiliated with Walker Capital Management. 770-441-2603. lewisw@theinvestmentcoach.com.

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