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Cannabis ETF An evolving regulatory environment can make navigating the cannabis theme challenging. POTX delivers a basket of publicly-listed companies involved in multiple aspects of this An in-depth look at the leading marijuana ETFs in the U.S. stock market this year. Here’s what you need to know. The best marijuana ETFs for Q4 2022 are MJ, MSOS, and YOLO.
An evolving regulatory environment can make navigating the cannabis theme challenging. POTX delivers a basket of publicly-listed companies involved in multiple aspects of this emerging industry in a single trade.
The Global X Cannabis ETF (POTX) seeks to invest in companies across the cannabis industry. This includes companies involved in the legal production, growth and distribution of cannabis and industrial hemp, as well as those involved in providing financial services to the cannabis industry, pharmaceutical applications of cannabis, cannabidiol (i.e., CBD), or other related uses including but not limited to extracts, derivatives or synthetic versions.
The Global X Cannabis ETF (POTX) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cannabis Index.
Performance is shown on a total return basis (i.e., with gross income reinvested, where applicable). Cumulative return is the aggregate amount that an investment has gained or lost over time. Annualized return is the average return gained or lost by an investment each year over a given time period.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. High short-term performance, when observed, is unusual and investors should not expect such performance to be repeated.
Global X ETFs Survey: U.S. Opinions on Recreational Cannabis
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Global X Management Company LLC makes no representations, warranties, endorsements, or recommendations regarding any broker, advisor, or other financial intermediary, nor are we affiliated with these entities. By clicking the links above you are leaving GlobalXETFs.com and visiting a third-party website. Global X Management Company LLC is not responsible for the contents of third-party websites.
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How can the Fund trade at a premium/discount to its NAV?
The primary explanation is that timing discrepancies can arise between the NAV and the trading price of the Fund. Since shares of the Fund trade on the open market, prices are affected by the constant flow of information received by investors, corporations and financial institutions. Depending on how this changing information affects investor sentiment, shares of the Fund may deviate slightly from the value of the Fund’s underlying assets. The NAV of the Fund is only calculated once a day (normally at 4:00 p.m. eastern time). As a result, shareholders may pay more than NAV when they buy Fund shares and receive less than NAV when they sell those shares, because shares are purchased and sold at current market prices. However, due to the creation and redemption process that is unique to ETFs, market makers are able to minimize these deviations from NAV by taking advantage of arbitrage opportunities.
What causes these time discrepancies?
Close of Trading Times. Although both the NAV and the daily market price of the Fund are generally calculated based on prices at the closing time of the exchange (generally 4:00 p.m. eastern time), slight differences in this timing may cause discrepancies.
Time of Last Trade. Trading of Global X funds generally takes place during normal trading hours (9:30 a.m. to 4:00 p.m. eastern time). However, it is important to note that the last trade – from which the closing price is determined – may not occur at exactly 4:00 p.m. eastern time. Therefore, changing market sentiment during the time difference may cause the NAV to deviate from the closing price.
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International Holdings. The premiums and discounts for funds with significant holdings in international markets may be less accurate due to the different closing times of various international markets. Because the Funds trade during U.S. market hours while the underlying securities may not, the time lapse between the markets can result in differences between the NAV and the trading price.
12/30/2019 12/31/2019 01/08/2020 $0.214861
06/29/2020 06/30/2020 07/08/2020 $0.396163
12/30/2020 12/31/2020 01/08/2021 $0.145255
06/29/2021 06/30/2021 07/08/2021 $0.096622
12/30/2021 12/31/2021 01/07/2022 $0.152559
06/29/2022 06/30/2022 07/08/2022 $0.323483
SEI Investments Distribution Co. (1 Freedom Valley Drive, Oaks, PA, 19456) is the distributor for the Global X Funds.
Check the background of SIDCO and Global X’s Registered Representatives on FINRA’s BrokerCheck
Investing involves risk, including the possible loss of principal. The investable universe of companies in which POTX may invest may be limited. The Fund invests in securities of companies engaged in Healthcare and Pharmaceutical sectors. These sectors can be affected by government regulations, expiring patents, rapid product obsolescence, and intense industry competition. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. POTX is non-diversified.
POTX’s investments are concentrated in the cannabis industry, and the Fund may be susceptible to loss due to adverse occurrences affecting this industry. The cannabis industry is a very young, fast evolving industry with increased exposure to the risks associated with changes in applicable laws (including increased regulation, other rule changes, and related federal and state enforcement activities), as well as market developments, which may cause businesses to contract or close suddenly and negatively impact the value of securities held by the Fund. Cannabis Companies are subject to various laws and regulations that may differ at the state/local, federal and international level. These laws and regulations may significantly affect a Cannabis Company’s ability to secure financing and traditional banking services, impact the market for cannabis business sales and services, and set limitations on cannabis use, production, transportation, export and storage. The possession, use and importation of marijuana remains illegal under U.S. federal law. Federal law criminalizing the use of marijuana remains enforceable notwithstanding state laws that legalize its use for medicinal and recreational purposes. This conflict creates volatility and risk for all Cannabis Companies, and any stepped-up enforcement of marijuana laws by the federal government could adversely affect the value of the Fund’s investments. Given the uncertain nature of the regulation of the cannabis industry in the United States, the Fund’s investment in certain entities could, under unique circumstances, raise issues under one or more of those laws, and any investigation or prosecution related to those investments could result in expense and losses to the Fund.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Beginning September 29, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to September 29, 2020, market price returns were based on the midpoint between the Bid and Ask price. Market price returns. NAVs are calculated using prices as of (4:00 PM Eastern Time). The returns shown do not represent the returns you would receive if you traded shares at other times. Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index.
Since the Fund’s shares did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in Shares, the NAV of the Fund is used to calculate market returns.
Carefully consider the Fund’s investment objectives, risks, and charges and expenses before investing. This and other information can be found in the Fund’s summary or full prospectuses. Please read the prospectus carefully before investing.
Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC or Mirae Asset Global Investments. Global X Funds are not sponsored, endorsed, issued, sold or promoted by Solactive AG, nor does Solactive AG make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO, Global X nor Mirae Asset Global Investments are affiliated with Solactive AG.
Investing in Marijuana ETFs
Cannabis is projected to be a $197.7 billion global market by 2028, according to Fortune Business Insights. The industry is expected to grow by a jaw-dropping compound annual growth rate of 32%.
Investors have several ways to potentially profit from this tremendous growth. You could invest in specific marijuana stocks, but another alternative is to invest in exchange-traded funds (ETFs) that focus on cannabis.
The main benefit of buying marijuana ETFs is that your money is spread across a basket of stocks, which can lower your risk compared to investing in only a few individual stocks. Here’s what you need to know about the top marijuana ETFs on the market.
Below are nine top marijuana ETFs ranked by assets under management.
AdvisorShares Pure U.S. Cannabis ETF (NYSEMKT:MSOS)
ETFMG Alternative Harvest ETF (NYSEMKT:MJ)
Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF)
AdvisorShares Pure Cannabis ETF (NYSEMKT:YOLO)
Global X Cannabis ETF (NASDAQ:POTX)
Amplify Seymour Cannabis ETF (NYSEMKT:CNBS)
The Cannabis ETF (NYSEMKT:THCX)
Cambria Cannabis ETF (NYSEMKT:TOOK)
Cannabis Growth Fund (NYSEMKT:BUDX)
AdvisorShares Pure U.S. Cannabis ETF
The largest marijuana ETF based on assets under management right now is the AdvisorShares Pure U.S. Cannabis ETF (NYSEMKT:MSOS). It’s the first ETF to focus exclusively on the U.S. cannabis market.
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AdvisorShares Pure U.S. Cannabis ETF currently owns 28 U.S. marijuana stocks. Its top holdings are Green Thumb Industries (OTC:GTBIF), Trulieve Cannabis (OTC:TCNNF), Curaleaf Holdings (OTC:CURLF), Verano Holdings (OTC:VRNO.F), and Cresco Labs (OTC:CRLBF). Together, these five U.S. multi-state cannabis operators make up more than 55% of the ETF’s total portfolio.
It’s possible that this ETF’s concentration on the U.S. market could give investors greater growth opportunities than other ETFs. Although marijuana remains illegal at the federal level in the U.S., many states have legalized marijuana for medical and/or recreational use.
ETFMG Alternative Harvest ETF
In 2015, ETFMG Alternative Harvest ETF (NYSEMKT:MJ) became the first ETF to target the global cannabis market. This ETF was established even before the Canadian cannabis industry took off after the legalization of recreational marijuana in 2018.
ETFMG Alternative Harvest ETF currently owns 35 individual stocks. Its top holdings include Aurora Cannabis (NASDAQ:ACB), Arena Pharmaceuticals (NASDAQ:ARNA), Canopy Growth (NASDAQ:CGC), Tilray Brands (NASDAQ:TLRY), and Cronos Group (NASDAQ:CRON). The five positions combined make up more than 31% of the ETF’s total assets.
Canadian cannabis producers weigh heavily in the ETF’s portfolio. This could hurt the ETF’s performance while current U.S. federal cannabis laws remain in effect. The Canadian companies can’t enter the U.S. cannabis market and retain their listings on major U.S. stock exchanges as long as marijuana is illegal at the federal level.
Horizons Marijuana Life Sciences Index ETF
Although Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF) isn’t listed on a major U.S. stock exchange, U.S. investors can buy the ETF on over-the-counter (OTC) markets. Its inception in 2017 makes it one of the oldest marijuana ETFs.
This ETF holds positions in roughly 30 marijuana stocks. Its top holdings include Innovative Industrial Properties (NYSE:IIPR), Jazz Pharmaceuticals (NASDAQ:JAZZ), ScottsMiracle-Gro (NYSE:SMG), Tilray, and Cronos Group. Together, these five stocks represent more than 63% of the ETF’s total portfolio.
Like all marijuana ETFs, Horizons Marijuana Life Sciences Index ETF is risky. However, its large positions in highly profitable companies such as Innovative Industrial Properties and Jazz Pharmaceuticals somewhat reduce the risks.
AdvisorShares Pure Cannabis ETF
AdvisorShares operates two marijuana ETFs. One focuses exclusively on the U.S. cannabis market, but the AdvisorShares Pure Cannabis ETF (NYSEMKT:YOLO) doesn’t limit itself to the U.S. Instead, it focuses on the global cannabis market.
This ETF currently has 23 holdings. Almost 36% of its assets are invested in the AdvisorShares Pure U.S. Cannabis ETF. The top five individual stocks in its portfolio are Innovative Industrial Properties, Village Farms International (NASDAQ:VFF), TerrAscend (OTC:TRSSF), Tilray, and RIV Capital (OTC:CNPO.F). These stocks make up almost 44% of the ETF’s total holdings.
The AdvisorShares ETF could be an attractive alternative to investors who want exposure outside of the U.S. but still want a heavier weighting to U.S. stocks.
Global X Cannabis ETF
Global X Cannabis ETF (NASDAQ:POTX) is operated by Mirae Asset, a financial services company based in South Korea. This ETF, as its name indicates, focuses on the global cannabis industry.
There are currently 25 individual stocks in the Global X Cannabis ETF portfolio. Its top holdings include Sundial Growers (NASDAQ:SNDL), Aurora Cannabis, Cronos Group, OrganiGram Holdings (NASDAQ:OGI), and Canopy Growth. These stocks combined make up more than 43% of the ETF’s assets.
This ETF is heavily weighted with Canadian cannabis stocks, which account for almost three-quarters of the portfolio. This could make Global X Cannabis ETF riskier than other ETFs with a higher percentage of U.S. stocks.
Amplify Seymour Cannabis ETF
Amplify Seymour Cannabis ETF (NYSEMKT:CNBS) bears the name of its manager, Tim Seymour. He is a well-known cannabis investor and has appeared frequently on CNBC’s Fast Money TV show.
The ETF currently holds positions in 33 stocks. Its top holdings include Green Thumb Industries, Curaleaf Holdings, Trulieve Cannabis, Cresco Labs, and Tilray. Those five stocks comprise nearly 37% of the ETF’s total assets.
U.S. marijuana stocks make up almost half of the Amplify Seymour Cannabis ETF. Most of the remaining portfolio consists of Canadian pot stocks, with a little more than 5% of assets invested in cannabis companies headquartered in Ireland and Israel.
The Cannabis ETF (NYSEMKT:THCX) began trading in July 2019. It focuses on stocks that could benefit from growth in both the hemp and legal marijuana industries.
This ETF currently owns 29 stocks. Its top positions include Cronos Group, Village Farms International, ScottsMiracle-Go, Fire & Flower Holdings (OTC:FFLW.F), and OrganiGram Holdings. Together, these five stocks make up more than 26% of total assets.
Probably the biggest knock against The Cannabis ETF is its relatively high expense ratio. However, some investors might like the fact that this ETF isn’t weighted as heavily among a few stocks as are some of the other marijuana ETFs.
Cambria Cannabis ETF is operated by Mebane Faber’s Cambria Investment Management. Like The Cannabis ETF, it launched in July 2019.
This ETF typically owns between 20 and 50 cannabis stocks. It currently holds positions in 35 stocks. The top holdings include Innovative Industrial Properties, Arena Pharmaceuticals, Constellation Brands (NYSE:STZ), Tilray, and ScottsMiracle-Go. The five stocks combined make up almost 42% of total assets.
Although Cambria Cannabis ETF provides exposure to U.S. marijuana stocks, it doesn’t own any of the leading multi-state operators. However, it offers the lowest expense ratio of the top marijuana ETFs.
Investing in Marijuana Stocks
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Cannabis Growth Fund is by far the smallest of the top marijuana ETFs. It’s operated by New Jersey-based Foothill Capital Management.
This ETF currently owns 21 holdings. Its top position, reflecting 17% of total assets, is in AdvisorShares Pure U.S. Cannabis ETF. Cannabis Growth Fund’s top five individual stocks are ScottsMiracle-Gro, Village Farms International, cannabis-focused real estate investment trusts (REITs) AFC Gamma (NASDAQ:AFCG) and Innovative Industrial Properties, and Tilray. The stocks combine to make up more than 41% of the ETF’s portfolio.
One key drawback to investing in such a small ETF is its lack of liquidity. The average trading volume for Cannabis Growth Fund is only a few thousand shares per day. The low level could make it harder for investors to sell at the desired price.
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Keith Speights has positions in Innovative Industrial Properties. The Motley Fool has positions in and recommends Constellation Brands, Cresco Labs Inc., Green Thumb Industries, Innovative Industrial Properties, OrganiGram Holdings, Scotts Miracle-Gro, Trulieve Cannabis Corp., and Village Farms International Inc. The Motley Fool has a disclosure policy.
Best Marijuana ETFs for Q4 2022
MJ, MSOS, and YOLO are the best marijuana ETFs for Q4 2022
Charles is an award-winning writer and marketing communications professional with over a decade of experience in journalism covering finance, business, real estate, and marketing. A recognized expert in his field, Charles’ insights have appeared in major national publications including Investopedia.
Marijuana exchange-traded funds (ETFs) provide investors with exposure to equities of companies that engage in the cultivation, distribution, and sale of marijuana and related products. Products of marijuana companies include dried flowers, oils, seeds, edibles, and more.
Still prohibited as an illegal substance in many parts of the world, marijuana is gaining wider acceptance for both medicinal and recreational purposes. Support for continued legalization is growing, and cannabis is now a multibillion-dollar industry. The global legal marijuana market is expected to expand at a healthy compound annual growth rate (CAGR) of 25.5% through 2030. Marijuana ETFs are a straightforward way for investors to gain exposure to a diversified basket of marijuana equities and profit from this growing industry.
Marijuana equities have significantly underperformed the broader U.S. equity market over the past year.
The marijuana exchange-traded funds (ETFs) with the best one-year trailing total returns are MJ, MSOS, and YOLO.
The top holdings of these funds are the ETFMG Sit Ultra Short ETF, GrowGeneration Corp., and the AdvisorShares Pure US Cannabis ETF, respectively.
Four marijuana ETFs trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). The marijuana sector, as measured by the Global Cannabis Stock Index, has dramatically underperformed the broader U.S. stock market over the past 12 months, with a one-year price change of -72.4% compared to the S&P 500’s one-year trailing total return of -3.7% as of Aug. 10, 2022. The best-performing marijuana ETF, based on performance over the past year, is the ETFMG Alternative Harvest ETF (MJ).
We examine the three best marijuana ETFs below. All numbers below are as of Aug. 11, 2022. In order to focus on the funds’ investment strategy, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.
ETFMG Alternative Harvest ETF (MJ)
Performance Over One Year: -64.8%
Annual Dividend Yield: 1.56%
Three-Month Average Daily Volume: 1,174,512
Assets Under Management: $424.7 million
Inception Date: Dec. 3, 2015
MJ is the first ETF to focus on the global cannabis industry and tracks the Prime Alternative Harvest Index. The gauge tracks the performance of companies within the global cannabis industry that are benefiting from the growth, marketing, and sale of cannabis products for medicinal and recreational use. Like other cannabis ETFs, investors should note that the fund’s large number of thinly traded small-cap stocks raises the issue of whether there might be sufficient liquidity to absorb money flows without distorting prices. Since marijuana is still illegal under federal law in the U.S., MJ’s portfolio is dominated by Canadian cannabis companies.
The fund’s top three holdings are Tilray Brands Inc. (TLRY), a Canada-based provider of medical cannabis; and Cronos Group Inc. (CRON.TO), a Canada-based cannabis research and technology company; and Canopy Growth Corp. (CGC), another Canada-based cannabis producer of medical cannabis (and recreational cannabis in Canada).
AdvisorShares Pure US Cannabis ETF (MSOS)
Performance Over One Year: -66.4%
Annual Dividend Yield: N/A
Three-Month Average Daily Volume: 1,234,661
Assets Under Management: $642.7 million
Inception Date: Sept. 1, 2020
MSOS is an actively managed fund that focuses on owning U.S. cannabis companies, including multi-state operators (MSOs) that are involved in diverse parts of the industry. The ETF seeks long-term capital appreciation. The companies in the ETF’s portfolio must be registered with the U.S. Drug Enforcement Administration (DEA) for dealing with marijuana for lawful research and the development of cannabis or cannabinoid-related products. The holdings of MSOS may focus on areas like real estate investment trusts (REITs), healthcare, hydroponics, and pharmaceuticals.
MSOS also uses swap contracts to provide exposure to the cannabis sector, which may increase volatility. The fund’s top three stock holdings are GrowGeneration Corp. (GRWG), a hydroponic and organic specialty gardening products retailer; Innovative Industrial Properties Inc. (IIPR), a REIT focused on the cannabis industry; and Ayr Wellness Inc. (AYR-A.CN), a maker and retailer of branded cannabis products.
AdvisorShares Pure Cannabis ETF (YOLO)
Performance Over One-Year: -68.9%
Annual Dividend Yield: 0.22%
Three-Month Average Daily Volume: 64,148
Assets Under Management: $77.9 million
Inception Date: April 17, 2019
YOLO is an actively managed ETF that seeks long-term capital appreciation by investing in both domestic and foreign cannabis equities. It invests in small- and mid-cap global companies that derive at least 50% of their revenue from the marijuana and hemp industry. Like MSOS above, companies must be approved by the DEA to use marijuana for legal research and the development of cannabis or cannabinoid-related products.
YOLO is designed to take advantage of the cannabis industry’s long-term growth and may be ideal for a buy-and-hold portfolio. It also allocates at least 25% of its portfolio to biotechnology, pharmaceuticals, and life sciences companies. The fund’s top three holdings are AdvisorShares Pure US Cannabis ETF (MSOS), described above; Village Farms International Inc. (VFF), a Canada-based grower of tomatoes, bell peppers, cucumbers, and cannabis; and Innovative Industrial Properties Inc.
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