It wasn’t that long ago that the possibility of a cannabis ETF was purely speculation. Now, it’s a reality.
On Wednesday (April 5), Horizons ETF Management officially announced the launch of the world’s first marijuana ETF on the Toronto Stock Exchange, Horizons Medical Marijuana Life Sciences (TSX:HMMJ).
As noted by the press release, the ETF is the first of its kind to offer exposure to Canadian and American-listed stocks involved with medical marijuana bioengineering and production.
“Canada is the birthplace of ETFs and has been home to many firsts in the industry. The Horizons Medical Marijuana Life Sciences ETF is another made-in-Canada ETF milestone, the world’s first marijuana ETF,” Steve Hawkins, President and Co-CEO of Horizons ETFs said in the press release. “At Horizons, we take pride in our innovation, so we’re very happy that for the first time, investors will be able to access a low-cost, diversified portfolio of companies that are directly involved in the rapidly growing medical marijuana industry.”
While the launch of the first ever cannabis etf is indeed exciting, it certainly doesn’t come without regulations: companies must meet minimum asset and liquidity thresholds to be considered. Following that, stocks are then readjusted on a quarterly and market-capitalization basis so they can’t exceed more than 10 percent of the index.
In describing potential investors who may be interested in the fund, Hawkins outlined them as “somebody who’s interested investing into the marijuana industry [and] believes that there’s a growth story with the marijuana industry.”
Still, he cautioned that investors may feel uncertain about volatility surrounding Canadian cannabis stocks.
“If you’re invested in one company, you’re taking a lot more individual risk from an investor perspective,” Hawkins told CBC.
On that note, to start off 14 marijuana stocks will be included in the fund, namely:
- Canopy Growth (TSX:WEED), whose shares have increased 0.7 percent to $10.13 over a one-day period;
- Aurora Cannabis (TSXV:ACB), shares of which have moved 3.08 percent since Wednesday’s announcement to $2.69;
- Aphria (TSX:APH), whose stocks has seen a 2.22 percent increase to $7.41
- Emblem (TSXV:EMC), whose shares have seen increase of 3.23 percent to $2.24 since Wednesday; and
- CanniMed Thereapeutics (TSX:CMED), shares of which have risen 1.75 percent since Wednesday to $12.24.
Similarly, the new ETF exchange itself has performed well since officially opening, rising 2.96 percent to 10.43 points as of 2:24 p.m EST on Thursday.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.