You’ve come a long way, baby: Cannabis to get its own ETF

When weed companies began trading publicly, the space wasn’t taken seriously.

Why would it?

You had desperate junior miners trying to resurrect market cap and/or boost exploration budgets, and a myriad of fly-by-night shells messing around with the investment community’s trust.

After the initial dust settled, and companies like Satori Resources (BUD.V) limped off into the wings, we were lolled into a false sense of security that the space had gone through its bloodletting.

We are far from an established playing field when it comes to legalized cannabis in North America.

Legislation, technology, and public favor continues to evolve.

The once fragmented mom-and-pop space is going through the pains of corporatization and consolidation.

As such, it’s still a bonanza for day traders and even though there are shrewd investors out there killing it by picking the winners, the rest of us are just trying not to lose a month’s worth of rent.

However, the market has now grown to the point where the highs are beginning to balance the lows, providing opportunities for those willing to make a broader investment.

Makes sense, if you can cover the table, you’re bound to get a hit.

You and I don’t have that kind of money, though. We’re lucky if we can hedge our bet on a few.

So, what do you do if you’re not Jeff Bezos and you don’t want to play the market like you’re him?

Well, ETF Managers Group, based in Summit, New Jersey, filed an initial registration for what just might be the first cannabis exchange-traded fund (ETF), the Emerging AgroSphere ETF.

According to the news release, the proposed fund will be focused on medical cannabis and will not invest in any companies that are focused on serving the non-medical market until such time that the production and sale of recreational marijuana becomes legal in the jurisdiction it is investing in.

Okay, I can get behind that. At least it’s halfway there.

So, what exactly would you be putting your money behind?

Let’s start with how the fund has been put together.

It is intended to replicate an index created by BE Asset Management to monitor the performance of exchange-listed common stock of companies across the globe.

The fund seeks out companies conducting legal medical research toward the development of prescription drugs, companies that produce or sell products that are legal derivatives of hemp as well as any supply chain company involved in either of the preceding verticals.

There are 69 names on the list so far, including Cannabix Technologies (BLO.C), Golden Leaf Holdings (GLH.C), Marapharm Ventures (MDM.C), Canopy Growth (WEED.T) and Supreme Pharmaceuticals (SL.C).

The index seems to be doing well, here is a snapshot of its performance over the last year:

Cannabis ETF

Look, if you got the money, time, resources, and intestinal fortitude, have at the market, speculative investment can be a beautiful thing, but if you’re not interested in becoming the next Elon Musk and just want to build a stable nest egg, this may be for you.

Now you can run with a champion stable, rather than a few horses you’re not sure will cross the finish line.

 

–Gaalen Engen

http://twitter.com/gaalenengen

 

FULL DISCLOSURE: Cannabix Technologies, Golden Leaf Holdings and Marapharm Ventures are EQUITY.GURU clients.

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