10 CANNABIS ETFS TO PLAY THE MARIJUANA BOOM

Cannabis stocks have had a great start through the first five months of 2019. As we enter the first full year of Canada’s recreational cannabis legalization and prepare for the “second wave” this October, investors have seen overall strong returns despite the early supply issues.

Authored By Matt Rego

In the U.S., more states continue to warm up to the idea of loosening cannabis laws. While the federal government continues to hold cannabis as a Schedule 1 drug, more conservative states like Utah and Texas have made recent moves to reverse long-standing policies. This shows that public opinion in favor of cannabis legalization is beginning to be reflected in state government policies.

As a result, the North American Marijuana Index has soared 30.24% year-to-date as of this writing. While the index has seen a slight dip in May, its performance still towers over the S&P 500’s YTD returns of just over 13%. Breaking cannabis performance down further, the Canadian Marijuana Index has returned 33.77% YTD and U.S. Marijuana Index has seen gains of 26.90% through late May 2019. With the marijuana industry continuing to bud, these ten cannabis ETFs provide a broad-basket way to play the “green rush:”

Horizons Marijuana Life Sciences ETF (TSX: HMMJ)

Launched in April 2017, the Horizons Marijuana Life Sciences ETF is not only the largest Canadian cannabis ETF presently, but it was also the first-to-market. The ETF is structured as an index fund that is designed to closely follow the performance of the North American Marijuana Index. As of May 24, 2019, HMMJ holds net assets of C$872.72 million.

Top 5 HMMJ Holdings

1. Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) – 12.51%
2. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) – 11.05%
3. GW Pharmaceuticals PLC (NASDAQ: GWPH) – 9.78%
4. Scotts Miracle-Gro Company (NYSE: SMG) – 8.68%
5. Tilray, Inc. (NASDAQ: TLRY) – 7.45%

ETFMG Alternative Harvest ETF (NYSE: MJ) 

The ETFMG Alternative Harvest ETF has the distinction of being the first U.S.-based marijuana ETF, which was re-branded and launched by ETF Managers Group in early 2018. The MJ ETF is geared towards producing results corresponding with the total returns of the Prime Alternative Harvest Index. Unfortunately, the ETF does not solely focus on cannabis, as tobacco stocks are among the holdings. On the bright-side, no tobacco stocks breach the fund’s top ten holdings. As of May 2019, the ETFMG Alternative Harvest ETF holds net assets of $1.2 billion.

Top 5 MJ Holdings

1. GW Pharmaceuticals PLC (NASDAQ: GWPH) – 8.82%
2. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) – 7.77%
3. Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) – 7.62%
4. Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) – 7.61%
5. Tilray, Inc. (NASDAQ: TLRY) – 7.38%

Horizons Emerging Marijuana Growers Index ETF (NEO: HMJR)

Sitting on the relatively-new Canadian stock exchange Aequitas NEO Exchange, the Horizons Emerging Marijuana Growers Index ETF is designed to closely replicate the performance of the Emerging Marijuana Growers Index. The index is comprised of public, smallcap cannabis cultivation companies operating in North America. HMJR was launched in February 2018, but has largely traded lower since entering the market. As of May 24, 2019, the Horizons Emerging Marijuana Growers ETF holds net assets of just under C$11 million.

Top 5 HMJR Holdings

1. Neptune Wellness Solutions, Inc. (NASDAQ: NEPT) (TSX: NEPT) – 5.54%
2. Flower One Holdings, Inc. (CSE: FONE) (OTCQX: FLOOF) – 5.51%
3. Supreme Cannabis Co, Inc. (TSX: FIRE) (OTCQX: SPRWF) – 5.44%
4. Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) – 5.37%
5. SLANG Worldwide, Inc. (CSE: SLNG) (OTC Pink: SLGWF) – 5.35%

Horizons U.S. Marijuana Index ETF (NEO: HMUS)

One of Horizons’ newer cannabis ETFs to hit the market is the Horizons U.S. Marijuana Index ETF, which was incepted on April 17, 2019. The HMUS ETF joins the HMJR ETF on the new Canadian NEO Exchange. The Horizons U.S. Marijuana Index ETF is designed to closely replicate the performance of the U.S. Marijuana Companies Index, which is comprised of U.S.-based marijuana or hemp producers. As of May 2019, HMUS holds net assets of C$18.09 million.

Top 5 HMUS Holdings

1. Charlotte’s Web Holdings, Inc. (CSE: CWEB) (OTCQX: CWBHF) – 10.50%
2. Columbia Care, Inc. (NEO: CCHW) – 10.46%
3. Cresco Labs, Inc. (CSE: CL) (OTCQX: CRLBF) – 10.27%
4. CuraLeaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) – 8.60%
5. MedMen Enterprises, Inc. (CSE: MMEN) (OTCQX: MMNFF) – 7.60%

AdvisorShares Pure Cannabis ETF (NYSE: YOLO)

AdvisorShares just incepted the Pure Cannabis ETF in April 2019, marking yet another recent entry into the cannabis market. It is also different than the other ETFs we have covered thus far due to the fact that it is an actively-managed ETF and not an index fund. The actively managed nature of the YOLO ETF makes its investment object to be long-term capital appreciation. However, contrary to normal ETFs and mutual funds, this actively-managed ETF has a net expense ratio of 0.74%, which is in-line or the same as its passive index alternatives. The YOLO ETF is mandated to invest at least 80% of net assets into companies that obtain at least 50% of their revenue from cannabis or hemp operations.

As of May 2019, the AdvisorShares Pure Cannabis ETF has almost 76% of its portfolio in Canadian and “Africa/Middle East” marijuana stocks (most likely Israeli cannabis stocks) and the remainder of the portfolio is allocated to U.S.-based companies. The YOLO ETF holds total assets of $57.96 million, as of May 24, 2019.

Top 5 YOLO Holdings

1. OrganiGram Holdings, Inc. (NASDAQ: OGI) (TSXV: OGI) – 9.05%
2. Aphria, Inc. (NYSE: APHA) (TSX: APHA) – 7.38%
3. Innovative Industrial Properties, Inc. (NYSE: IIPR) – 7.06%
4. The Green Organic Dutchman Holdings, Ltd. (TSX: TGOD) (OTCQX: TGODF) – 6.75%
5. CannTrust Holdings, Inc. (NASDAQ: TRST) (TSX: TRST) – 6.44%

AdvisorShares Vice ETF (NASDAQ: ACT)

Although not a pure-play on cannabis, the AdvisorShares Vice ETF is primarily comprised of alcohol, tobacco, and will now include marijuana securities. Originally incepted in December 2017, the ETF recently revised the ETF mandate to include cannabis and hemp-related stocks. As of May 2019, the Vice ETF held assets under management of $13.12 billion.

Through the end of April 2019, 24% of the ACT ETF was allocated to just cannabis stocks, 9% to tobacco companies with cannabis exposure, and 5% to alcohol companies with cannabis exposure. However, the cannabis-related positions do not really make an appearance within the top ten holdings. As of end of May 2019, the Vice ETF held total assets of $13.12 million.

The rest of the ETF is held in tobacco, alcohol, and entertainment companies. Despite being a “vice” ETF, the fund’s top five holdings are slightly puzzling, due to its biotech and healthcare positions.

Top 5 ACT Holdings

1. Turning Point Brands, Inc. (NYSE: TPB) – 5.79%
2. The Boston Beer Company, Inc. (NYSE: SAM) – 5.55%
3. Darden Restaurants, Inc. (NYSE: DRI) – 5.38%
4. Thermo Fisher Scientific, Inc. (NYSE: TMO) – 5.34%
5. Abbott Laboratories, Inc. (NYSE: ABT) – 4.94%

Evolve Marijuana ETF (TSX: SEED) 

Incepted in February 2018, the Evolve Marijuana ETF seeks to be a Canadian alternative to the Horizons ETFs. Furthermore, the SEED ETF is different from other Canadian cannabis ETFs in that it is actively managed. The goal of the ETF is to provide investors with long-term capital appreciation through exposure to Canadian and international cannabis securities and issuers. The Evolve Marijuana ETF has assets under management of C$13.75 million, as of May 24, 2019.

Top 5 SEED Holdings

1. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) – 13.97%
2. Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) – 9.51%
3. HEXO Corp. (NYSE: HEXO) (TSX: HEXO) – 5.75%
4. OrganiGram Holdings, Inc. (NASDAQ: OGI) (TSXV: OGI) – 5.71%
5. Charlotte’s Web Holdings, Inc. (CSE: CWEB) (OTCQX: CWBHF) – 5.19%

Horizons BetaPro Marijuana Companies 2X Daily Bull ETF (TSX: HMJU) 

As the cannabis boom as continued to take hold, new ETFs and instruments are being released into the market with the hopes of capitalizing on the massive trend. Therefore, it is no surprise that we now have a leveraged cannabis ETF for the serious speculator. The HMJU leveraged cannabis ETF is brand-spankin’ new and has only been live for two trading days (May 23-24, 2019).

According to the HMJU investment objective, the ETF seeks to provide a “two times multiple of the daily performance of the North American MOC Marijuana Index.” Furthermore, the ETF is permitted to invest in equities, derivatives, interest-producing accounts and even T-Bills. Through its first few days of existence, the HMJU ETFalready has net assets of C$9.83 million.

Top 5 HMJU Holdings

1. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) – 13.12%
2. GW Pharmaceuticals PLC (NASDAQ: GWPH) – 12.17%
3. Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) – 11.02%
4. HEXO Corp. (NYSE: HEXO) (TSX: HEXO) – 9.79%
5. Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) – 8.18%

Horizons BetaPro Marijuana Companies Inverse ETF (TSX: HMJI)

Much like the leveraged cannabis ETFs, Horizons is again the first investment firm to offer investors a way to use inverse ETFs to short cannabis stocks. The short cannabis ETF is not leveraged, but it does seek to provide the opposite daily performance of the North American MOC Marijuana Index. The HMJI ETF is mandated to invest in equities, derivatives, interest-producing accounts, and T-Bills. HMJI currently sports steep hedging costs of 18.08%, as of this writing. The Horizons BetaPro Marijuana Companies Inverse ETF was also just incepted on May 23, 2019 and holds net assets of C$5.16 million.

Top 5 HMJI Holdings

1. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) – 13.12%
2. GW Pharmaceuticals PLC (NASDAQ: GWPH) – 12.17%
3. Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) – 11.02%
4. HEXO Corp. (NYSE: HEXO) (TSX: HEXO) – 9.79%
5. Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) – 8.18%

Teucrium Emerging Medical Agriculture Index ETF (Coming Soon)

Teucrium is known for its commodities ETFs, which are comprised of futures in corn, soybeans, sugar, wheat, and combination of the four. However, there is a new ETF on the way that will be its first to hold stocks and will have exposure to medical marijuana.

A prospectus has been filed, which shows the ETF could invest in biotech-based medical marijuana, investment firms with holdings in medical cannabis, cultivation technologies, equipment, and more. In addition, the ETF is able to invest in peripheral industries that support medical marijuana, such as media, real estate, funding, and more. Be warned though, Teucrium’s expense ratios for its commodities ETFs range from high 1% to high 2% (the combination ETF has 0.48% expense ratio, but that is on top of other expenses). It is likely its cannabis ETFs could be faced with a similar expense ratios.