Thursday marks the first day of trading for the ETFMG U.S. Alternative Harvest ETF (NYSEARCA: MJUS) with holdings in 33 companies that derive at least half their net revenue from the U.S. cannabis market. Investors in the fund will have exposure to multi-state operators (MSOs) directly involved in the cultivation, production, marketing and distribution of cannabis or cannabis-related products.
At inception, four of the fund’s top five holdings are traded over the counter (OTC). The fund’s largest investment is OTC-traded Curaleaf Holdings (CURLF) at $102,769, accounting for 10.26% of total assets under management (AUM). Another OTC-traded stock, Green Thumb Industries, accounts for 8.94% of AUM with a value of $87,113.
Investments in Cresco Labs and Trulieve rank third and fourth among the top five investments with, respectively, 8.18% of AUM valued at $75.956 and 7.28% of AUM valued at $71,323. Both these stocks are also traded OTC. The fifth-largest investment is Innovative Industrial Properties Inc. (NYSE: IIPR), with 6.54% of AUM valued at $63,259.
With few exceptions, investing in cannabis companies that do most of their business in the United States means investors have to look for OTC opportunities or turn to foreign exchanges. The MJUS ETF, according to the fund’s announcement, offers investors “a way to benefit from the continued growth of the U.S. cannabis industry and the leading companies directly involved in U.S. cannabis-related activities.”
Legal U.S. cannabis sales topped $17.5 billion in 2020, a 46% year-over-year increase. With more states legalizing cannabis and more consumers in existing legal markets, the expansion of the U.S. cannabis industry is expected to reach $85 billion in annual sales by 2030.
The cannabis industry is counting on the Biden administration to remove the federal classification of marijuana as a dangerous (Schedule 1) drug, the same category as heroin and cocaine. Now that New York state has legalized marijuana, there are just six states remaining where marijuana is still illegal for any use, including medical. ETFMG adapted the following map from data compiled by DISA Global Solutions.
Source: ETF Managers Group LLC
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