Thanks to the viability of investing in marijuana, exchange-traded funds (ETFs) centered on the cannabis space have seen an unprecedented increase in launches so far in 2019.

Existing players in the cannabis ETF space have welcomed the barrage of fresh additions, but debate has developed about the overall health of the market.


In 2019, investors have seen four brand new ETFs launch on US exchanges: the AdvisorShares Pure Cannabis ETF (ARCA:YOLO), the Cannabis ETF (ARCA:THCX), the Amplify Seymour Cannabis ETF (ARCA:CNBS) and the Cambria Cannabis ETF (CBOE:TOKE). In Canada investors have gained four additional ETFs in 2019.

A player who helped launch two of these new ETFs in the US said that investment in marijuana is only set to go up as more investors gain confidence in the space.

“It’s pretty evident that there’s an unfulfilled demand in the investment world in (terms of) how to get some exposure to the cannabis industry,” Kip Meadows, CEO of fund administration firm Nottingham, told the Investing News Network (INN).

Nottingham acts as the transfer agent and fund account and administrator for two of the most recent cannabis funds: the Cannabis ETF and the Amplify Seymour Cannabis ETF.

Meadows confirmed that these new funds in the US are targeting investors who are starting to become aware of the financial gains available in the marijuana space. “Each time you have a new industry it’s exciting to be a part of it.”

When asked if these launches could represent an overwhelming slate of offerings for investors, Meadows said he doesn’t see a glut of cannabis funds yet.

“I think we might be getting to the point where you can start looking at the differences between those four to five funds that are out there and say, ‘well which one makes more sense to me?’” Meadows said.

Canadian ETF players react to the rush of new funds

Investors in Canada have engaged and have been quick to adapt to the novelty of the cannabis play. This interest led to the first few cannabis ETFs in the Canadian markets.

Horizons ETFs Management (Canada) launched the first Canadian cannabis fund in 2017 as a passive index tracking the industry. The Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ), launched in 2017, quickly grew and became a reference point for the state of the market.

Mark Noble, senior vice president of ETF strategy with Horizons ETFs, told INN that the appeal for all these funds is still sector diversification.

“Whenever you’re dealing with an early stage industry, like the global cannabis market, you’re going to have a high degree of failure and what you’re hoping to do is capture in some way, shape or form the successful companies that are going to be the leaders of the sector,” Noble said.

Horizons ETFs hasn’t slowed down the pace of its ETF launches. Since the launch of its flagship ETF, the Canadian operator has debuted four more marijuana funds.

With so many new funds entering the space and more on the way, are Canadian ETF operators concerned about a saturation for cannabis funds? Not really; similar to the US, they welcome the growing stream of launches, such as the Amplify Seymour Cannabis ETF.

“More people selling marijuana equities is only going to create more interest in the space, and then people will naturally gravitate towards our products,” said Noble. “I don’t have a problem with that, the competition doesn’t concern us. It probably legitimizes the space.”

Elliot Johnson, chief investment officer with Evolve Funds Group, told INN he is excited to see some competition in the space.

Both fund operators expressed confidence in their respective funds and distinctive fund operation styles.

Evolve relies on active management done by Elliot and his team for all its cannabis funds, while Horizons ETFs elects to follow a passive method, meaning the fund tracks a basket of securities and performs a quarterly rebalance to add more stocks into its holdings.

However, Johnson acknowledged there will be a point in the future where the market may see an excess of ETF offerings.

“I think, ultimately, there’ll be some point of saturation where people will stop entering into the cannabis ETF market because they feel the ground is well covered and they’ve got nothing to contribute. At that point in time, things will certainly normalize,” he said.

Market sees stream of ETFs in 2019, more on the way

While Canadian operators are welcoming the competition from these new funds, in the US investors are seeing a rush of funds chasing a collection of similar holdings.

In 2019 alone, the market has seen the launch of eight new marijuana ETFs on North American exchanges. The four US-based funds have similar names at the tops of their holdings lists.

“They’re all pretty much chasing the same group of companies,” Noble told INN. “Anyone coming to market now with ETFs, they are going to have a very hard time distinguishing themselves from the already established ETFs in Canada and the US.”

As of Tuesday (August 6), public holdings records showed overlap in the top weighted constituents of all four US-based cannabis ETFs in companies such as: Charlotte’s Web Holdings (TSX:CWEB,OTCQX:CWBHF), Aurora Cannabis (TSX:ACB,NYSE:ACB) and Aphria (TSX:APHA,NYSE:APHA).

In addition to all these new funds, the firm Global X filed a prospectus for the launch of its own Global X Marijuana ETF. In July, Bloomberg reported that ETF firm BlackRock was in the early stages of considering the launch of its own cannabis ETF.

“It’s a big win for marijuana equity investors, all these new ETFs are coming,” said Noble. “More money comes in ETFs, more money will go into these companies, especially in the smaller side, and they will see their valuations increase.”

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ETF authority warns against cannabis fund hype

Despite the excitement from ETF operators to enter the cannabis space — or welcome the added competition — one ETF expert offered a gloomy prediction for the market.

Daniel Straus, vice president of ETFs and financial products research at the National Bank of Canada, previously told Bloomberg he expects sentiment for these funds to dramatically change at some point.

“The risk may be to the starry-eyed fund provider who thinks putting a marijuana ETF out there is an easy path to asset gathering,” said Straus. “When people find marijuana investing boring, many of these smaller products will close shop.”

Straus conceded that the first-mover advantage for some of the first cannabis funds has helped in terms of reach of investment interest. However, he remains skeptical that interest will remain long term. “I do think that a day of reckoning will come,” he said.

Johnson told INN that the first Canadian cannabis ETF saw a rapid surge to over C$1 billion in assets under management thanks to its sole status and because investor interest and enthusiasm was extremely high.

The Canadian fund manager said he views the long-term state of the cannabis ETF market as tied to the maturation of the industry thanks to larger changes expected, such as the full legalization in the US.

“We think (those changes) will bring a whole new category of investors to the market and we think that will be supportive both of valuations improving as well as assets improving the size of the funds in the space and the number of participant investors,” Johnson said.

Canadian players offer a counter to influx of US listings

While the future for the cannabis ETF market continues to develop with emerging US-based funds, the Canadian players maintain one clear advantage in a key growth area.

Multi-state operators (MSOs) are cannabis companies managing assets in states with legal marijuana programs in place for the sale of medical or recreational items. These companies have tapped a play previously unavailable to enthusiastic cannabis investors in Canada.

“I think there may be some investors who are US domiciled buying these funds, thinking that they are getting access to the growth of the US cannabis, but in fact they are not,” Johnson told INN.

The two Canadian ETF firms, Horizons ETFs and Evolve, launched new funds simultaneously in April focused exclusively on the US market.

Both of these new funds — the Evolve US Marijuana ETF (NEO:USMJ) and the Horizons US Marijuana Index ETF (NEO:HMUS) — listed on the NEO Exchange, an emerging exchange in Toronto that has elected to not block trading from marijuana operations in the US despite the federal illegality of the drug.

“(These new ETFs in the US) don’t even have the ability to buy companies that are really offering probably the most upside potential right now, which are the MSOs,” Noble said.

In addition to these two funds, Canadian investors have also gained exposure in the US space thanks to the Purpose Marijuana Opportunities ETF (NEO:MJJ).

This edge remains thanks to the complex state of the marijuana market in the US.

MSOs seek listings in Canada due to the federal illegality of the drug in the US, preventing listings on any senior exchanges such as the NASDAQ or the New York Stock Exchange.

In Canada, these companies have also been forced to look away from established listing exchanges. TMX Group (TSX:X), which manages the Toronto Stock Exchange and the TSX Venture Exchange, has elected to block any trading for US-based marijuana activities.

As a result, MSOs have had to adapt and pursue listings on the Canadian Securities Exchange and also on the Toronto-based NEO Exchange.

“More normalization of opinions around cannabis in society I think is also going to drive more participation among the investor community,” Johnson said.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Trial designed to investigate the cardioprotective properties of CardiolRx(TM) in patients hospitalized with COVID-19 who have a prior history of, or risk factors for, cardiovascular disease

Cardiol Therapeutics Inc. (TSX: CRDL) (OTCQX: CRTPF) (“Cardiol” or the “Company”), a clinical-stage biotechnology company focused on the research and clinical development of anti-inflammatory therapies for the treatment of cardiovascular disease, today announced the formation of the Data Safety Monitoring Committee (“DSMC”) and the Clinical Endpoint Committee (“CEC”) for the Company’s Phase IIIII trial in high-risk patients hospitalized with COVID-19 at clinical centers throughout the United States.

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Progressive Planet Solutions Inc. (TSXV: PLAN) (“PLAN” or “Progressive Planet”), announces that, further to its news releases dated December 22, 2020 and January 7, 2021 the Company has closed its non-brokered private placement financing comprising of 7,500,000 units, at $0.10 per unit, for total gross proceeds of $750,000 .

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/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES /

 Revive Therapeutics Ltd. (” Revive ” or the ” Company “) (CSE: RVV) ( USA : RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, is pleased to announce that is has entered into an agreement with Canaccord Genuity Corp. and Leede Jones Gable Inc. as the co-lead underwriters (collectively, the ” Underwriters “), pursuant to which the Underwriters have agreed to purchase, on a bought-deal basis, 20,000,000 units (the ” Equity Units “) at a price of $0.50 per Equity Unit for gross proceeds to the Company of $10,000,000 (the ” Offering “).

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The Australian cannabis market has been maturing since medical marijuana was federally legalised in 2016.

The next year, Food Standards Australia New Zealand legalised low-THC hemp food for human consumption in Australia. The country went on to legalise medical marijuana exports in 2018, allowing medicinal marijuana products developed in Australia to be exported to licenced recipients in countries where the drug is legal.

Recreational cannabis remains federally illegal in the country, but recent legislation shows the door may be opening. In 2019, the Australian Capital Territory passed a bill allowing for the possession and growth of small amounts of cannabis for personal use. The law went into effect on January 31, 2020.

More recently, in late 2020, the Therapeutic Goods Administration greenlit the sale of low-dose cannabidiol (CBD) through over-the-counter methods without a prescription. The ruling from the Australian regulatory agency is expected to officially come into effect in February 2021.

With these and other changes in the works, Australia’s cannabis industry is projected to have long-term potential. The legal cannabis market in Oceania is expected to be worth US$1.55 billion by 2024, with Australia accounting for 79 percent of the region’s market, Prohibition Partners forecasts.

According to a study from FreshLeaf Analytics, the value of the medical market in Australia reached AU$95 million in 2020, and the firm expects revenue to jump again to over AU$150 million in 2021. In short, Australia’s role in the global cannabis industry will certainly continue to grow.

Here the Investing News Network profiles 10 ASX cannabis stocks with market caps between AU$30 million and AU$225 million. All ASX cannabis stocks below are listed in order of market capitalization from largest to smallest, with data compiled using TradingView’s stock screener on January 12, 2021.

1. Creso Pharma (ASX:CPH)

Market cap: AU$209.83 million

Creso Pharma was the first company to import medical cannabis into Australia and the first to launch these products in Switzerland for people, as well as animals. The cannabis company’s anibidiol product was the first hemp CBD complementary feed in animal health thanks to a partnership with Virbac Switzerland. Creso Pharma has also launched cannaQIX in Switzerland; it was the first CBD nutraceutical in human health.

The company’s medicinal cannabis product lines cover therapeutics, nutraceuticals, animal health, lifestyle and topicals.

2. Cann Group (ASX:CAN)

Market cap: AU$176.84 million

Cann Group provides a range of medicinal cannabis products for patients in Australia and globally. In 2017, the company was granted Australia’s first cannabis research licence, as well as the first medicinal marijuana cultivation licence. Cann Group partners with leading medical scientists in Australia to research and harness the therapeutic potential of cannabinoids, terpenes and other bioactive constituents of cannabis.

The company has secured supply agreements in global cannabis markets, including the UK, Germany and other European segments.

3. Incannex Healthcare (ASX:IHL)

Market cap: AU$166.42 million

Incannex Healthcare is a clinical-stage cannabinoid medicine company with global export capacity. It has four clinical programs underway for the development of a variety of cannabis medicinal products aimed at major unmet medical needs, including obstructive sleep apnea, traumatic brain injury/concussion, sepsis-associated acute respiratory distress syndrome and temporomandibular joint disorder.

In 2020, the company worked to advance its clinical trials. By the second half of the year, cannabinoid products accounted for Incannex’s entire revenue stream.

4. Botanix Pharmaceuticals (ASX:BOT)

Market cap: AU$131.37 million

Botanix Pharmaceuticals has a product pipeline that includes three advanced clinical programs using synthetic cannabidiol for the topical treatment of serious skin diseases and for antimicrobial applications. The company also has an exclusive licence to use a proprietary drug-delivery system called Permetrex for direct skin delivery of pharmaceuticals.

Botanix Pharmaceuticals’ programs are focused on treating acne, rosacea, atopic dermatitis and microbial infection. The company secured a clear development path for its BTX 1801 synthetic cannabidiol antimicrobial product after the successful completion of a pre-investigational new drug meeting with the US Food and Drug Administration.

5. Althea Group Holdings (ASX:AGH)

Market cap: AU$114.2 million

Althea Group Holdings takes the concept of medical cannabis a step further with its work as a pharmaceutical-grade cannabis supplier. In addition to offering relief through accessible medical cannabis, the company is implementing components of the plant in its research on advanced drugs.

Althea has successfully expanded into the global cannabis market with a wholesale supply agreement to import a range of Althea-branded finished products for sale and distribution in South Africa beginning in Q2 2021. This agreement came on the heels of the news that the company is slated to become the first commercial supplier of Australian medicinal cannabis extract products to the German market, with all necessary licences for sale and distribution granted by the German government.

6. Zelira Therapeutics (ASX:ZLD)

Market cap: AU$113.79 million

Zelira Therapeutics’ efforts are on unmet clinical needs and on using medicinal cannabis to treat a range of diseases and disorders. Its most common target areas include pain, anxiety and sleep.

Zelira is largely focused on developing treatment options using plant-based medicinal marijuana, and currently has three clinical-stage programs with a focus on insomnia, autism and opioid reduction. The company is also conducting a pre-clinical research program to test cannabinoids in breast, brain and pancreatic cancer.

7. Medlab Clinical (ASX:MDC)

Market cap: AU$75.51 million

Medlab Clinical is a medical research and development company focused on novel biotherapeutics such as nutraceuticals and pharmaceuticals. The company is also developing pharmaceutical cannabis products.

In early 2020, Medlab Clinical launched the NanaBis Observation Study in Australia. NanaBis is a cannabis-based pain treatment drug that may prove useful as an alternative to opioid medication. It is also being used to investigate cancer pain management.

8. BOD Australia (ASX:BDA)

Market cap: AU$49.25 million

BOD Australia is focused on cannabis and hemp-related products. It develops, distributes and markets health and skincare products created using plant-based extracts in Australia. The company secured a foothold in the European cannabis market in 2020 with a AU$200,000 purchase order for four Swiss-branded hemp seed oil products to be sold in France, the Netherlands and the UK.

BOD Australia’s reach in Australia ranges from selling prescription and over-the-counter products to more than 1,000 outlets, such as pharmacies, retail stores and healthcare chains. It also has distribution agreements with two pharmacy wholesalers in Australia.

9. IDT Australia (ASX:IDT)

Market cap: AU$42.47 million

One of Australia’s oldest listed life science companies, IDT Australia is a pharmaceutical manufacturing company with extensive experience in the development and production of pharmaceutical products. Through its GMP-compliant facilities, the company provides full-scale services for new drug development, plus scale-up and commercial active drug manufacturing for local and international clients.

IDT Australia’s clients include Cann Group; IDT Australia is the manufacturer of the medical cannabis products that are a part of two of Cann Group’s export supply agreements with European and UK partners.

10. MMJ Group Holdings (ASX:MMJ)

Market cap: AU$31.04 million

MMJ Group Holdings has a wide range of cannabis investments, including healthcare products, technology, infrastructure, logistics, processing, cultivation, equipment, retail and research and development.

Among other companies, it has invested in Harvest One Cannabis (TSXV:HVT,OTCQB:HRVOF), which develops health and wellness products; Fire & Flower Holdings (TSXV:FAF,OTCQX:FFLWF), a recreational cannabis retailer that’s developed a variety of cannabis products and accessories; and MediPharm Labs (TSXV:LABS,OTQQX:MEDIF), a cannabis extraction company that received its cannabis oil production licence from Health Canada in 2018. MediPharm Labs has launched cannabis extraction services in Australia.

Investor takeaway

The presence of these ASX-listed cannabis companies shows that the cannabis industry in Australia is undoubtedly growing, as are investment opportunities in Australia’s cannabis industry. While recreational marijuana remains illegal in the land down under, the medical cannabis industry is thriving, making that side of the sector worth considering.

So far, Australia has no timeline attached to the legality of recreational use of marijuana, but it will be a story to watch over the coming years for those interested in the space.

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Legal cannabis is spreading. According to a new report by Grand View Research, the global legal marijuana market is expected to reach US$73.6 billion by 2027 with a compound annual growth rate of 18.1 percent.

A survey of over 1,000 US consumers found that the modern cannabis user is largely representative of the general population. Moreover, cannabis consumption today blurs the lines between strictly recreational or medical. In fact, more than 50 percent of consumers report using cannabis for both purposes. As THC and CBD products make their way into an even wider array of product categories, our frame of reference for the modern cannabis user will continue to evolve.

In 2019, the medical cannabis market took home a leading revenue share of 71 percent, driven by the widespread adoption of cannabis as a pharmaceutical alternative for a wide range of conditions, including cancer, arthritis, Parkinson’s disease and more. A growing need for effective pain management therapies is expected to boost product demand even further.

This INNspired Article is brought to you by:

Khiron Life Sciences Corp. (TSXV:KHRN) is a vertically-integrated medical cannabis company fully licensed to conduct its core operations in Colombia.Send me an Investor Kit

Major telehealth platforms in the medical cannabis industry

Telehealth represents the intersection between innovative technology and the forefront of medical science. While remote medical practice saw its beginnings more than half a century ago, recent technological advancements have connected more patients to physicians than ever before.

In the US, platforms like NuggMD and IndicaMD provide patients with an online medical cannabis card that enables remote purchase of the drug. Patients can meet with physicians over secure video chat and can be approved to access cannabis within minutes. Physicians typically follow-up with patients by email, recommending the types of cannabis that would best alleviate their ailments and ensuring that they don’t purchase the wrong products. Other platforms exist to oversee the rapid delivery of cannabis and hemp products to patients across participating states.

Other parts of the world are undergoing the same transition. It has been more than eight years since Colombia — a country that represents more than a quarter of the world’s total export quotas — decriminalized the possession of small amounts of the drug, and roughly four years since the country legalized medical cannabis. In 2019, Colombia’s Constitutional Court overruled a ban on the public consumption of cannabis, which many considered a stepping stone toward full legalization. Recently, Colombia became one of the first countries in the world to extend national health insurance for patients requiring medical cannabis as a first-line therapy.

Khiron Life Sciences (TSXV:KHRN) was the first firm in Colombia authorized to sell both high and low THC formulations of medical cannabis. The company owns a telehealth platform that has accounted for over 5,600 medical cannabis prescriptions issued to date. Additionally, in June 2020 the company’s Doctor Zerenia telehealth platform was responsible for 14 percent of Khiron’s total medical consultations.

Since becoming the first company to fill medical cannabis prescriptions in Colombia, Khiron reports that 92 percent of its patients have experienced a marked improvement in their primary condition after four months of treatment. In light of these results, the Government of Colombia issued a directive that Khiron’s medical cannabis products and clinic services be covered by the country’s major health insurance providers. While countries such as Germany and the Czech Republic have taken similar legislative actions, a key difference in Colombia is that cannabis is considered a first line therapy with a vast array of applicable medical conditions. With more than 94 percent of Colombia’s population carrying health insurance policies, Colombia is quickly becoming one of the most favourable jurisdictions in the world for patient access; moreover, it has been shown that patient uptake is significantly increased by insurance coverage.

The next step forward for telehealth platforms includes opportunities such as virtual patient education and the fast, reliable delivery of essential drugs such as medical marijuana. Virtual care is also expected to expand across different types of patients, including those requiring intensive care. In the wake of the COVID-19 pandemic, many long-term care facilities have already adapted remote patient monitoring to maintain the safety of staff and patients.

The focus: Accessibility and improving patient outcomes

Medical marijuana has the power to improve patient outcomes across demographics. In the wake of groundbreaking research, patients, physicians and retailers are working together to increase the drug’s accessibility for patients who require relief from a range of health conditions. Telehealth platforms have been instrumental in not only increasing accessibility to medical marijuana, but also in improving quality of life across diverse populations of people.

A recent study completed by Canopy Growth (NASDAQ:CGC,TSX:WEED) in November 2020 found the absence of long-term toxicity despite long-term usage of CBD in a preclinical model, supporting the advancement of recent initiatives aimed at discovering CBD’s full range of therapeutic benefits. While CBD and tetrahydrocannabinol (THC) offer many of the same benefits, high levels of THC are responsible for most of cannabis’s psychoactive effects.

While the chronic pain segment dominated the medical cannabis market in 2019, application toward mental illness is expected to witness the fastest growth over the seven-year forecast period. Worldwide, a growing number of people suffer from depression, anxiety and other debilitating mental conditions with few low-risk pharmaceutical alternatives.

Medical cannabis is also becoming more popular among older adults. A recent study highlighted that cannabis use among individuals aged 65 and older has been steadily increasing, a trend that is consistent with reports from physicians who recommend cannabis in their daily practices. In the face of growing public acceptance and reduced stigma, we are beginning to see an increasing number of older adults rely on cannabis for relief against chronic pain, insomnia, neuropathy, anxiety and other conditions that traditionally call upon pharmaceuticals.

Much of the momentum in the medical cannabis market can be owed to the rise of telehealth platforms and health digitization efforts, increasing ease of access and promoting transparency. Over the next decade, legalization, increased awareness and the rise of remote medicine are expected to facilitate growth, creating lucrative opportunities for market stakeholders.

Takeaway

Telehealth platforms represent one of the easiest ways for patients, providers and retailers to collaborate remotely and fulfill needs faster. As more physicians and policymakers begin to recognize digital health tools as an advantage for maximizing efficiency and safety in health care, existing medical cannabis platforms are well-positioned to take advantage of a large-scale digital transition.

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