Two providers are proposing to launch ETFs with exposure to medical cannabis companies
While no marijuana ETFs exist at the moment, a strong push is being made to create two products that expose investors to the medical marijuana space.
US-based firm ETF Managers Trust has applied to list the Emerging Agrosphere ETF on the NYSE Arca Exchange, according to Investing News Network. The ETF will be made up of around 69 medical marijuana companies, which either produce or sell hemp-based products, or do research on cannabidiol and cannabis use in prescription drugs. The US medical marijuana market has been projected to be increase in value from US$6.9 billion in 2016 to US$21.6 billion in 2021.
Horizons ETFs has also filed a proposal to list the Horizons Medical Marijuana Life Sciences ETF on the TSX, which would provide Canadian investors with exposure to North American publicly listed life sciences companies in the marijuana industry. It will aim to follow Solactive’s North American Medical Marijuana Index. It is also anticipated to include 18 companies from subsectors including biopharmaceuticals, medical manufacturing, distribution, and other businesses ancillary to the medical marijuana industry.
Neither of the companies’ ETFs have approval or a launch date yet. Horizons’ cannabis ETF is set to trade under the symbol HMMJ.
While the cannabis industry has experienced some strong tailwinds, there is also risk ahead. The US administration under President Donald Trump has announced intentions to enforce stricter drug laws. Jacob Capital Management Head of Research Khurram Malik has also said in an interview with BNN that the proposed cannabis ETF “might not be the pure play investors might be looking for.”
“The tricky thing is, can you [get] enough constituents to put into the ETF to meet those really strict requirements in terms of liquidity hurdles, in terms of market cap hurdles, et cetera,” he said.
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