With the growth of investment opportunities in the cannabis space, it was only natural for the rise of exchange-traded funds (ETFs) to appear.

The public marijuana market has seen the creation of a few leading ETFs that have allowed investors to gain a broad entry into the pot stocks game, without committing to one specific stock.

ETFs offer investors a tracking stock index that can be traded in a public stock market.


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Due to the extreme volatility in the overall marijuana stocks space, these ETFs are still targets to the ups and downs of any given trading day. The marijuana stock market has been prone to wide swings in trading volumes leading to large increases or decreases in value.

Instead of navigating the space for individual stocks, ETFs offer investors an alternative by removing the option on which stocks to buy thanks to their assets.

These ETFs have also served as a referendum on the state of the marijuana industry, showing its peaks and declines, depending on the market.

Despite some of the similar investing concepts, these stocks and ETFs can be found across stock exchange options in the Canadian market.

Here, the Investing News Network (INN) presents a guide on the market for cannabis-centric ETFs and which to follow in 2019.

1. Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ)

Horizons ETFs broke ground in 2017 when it launched the first ETF with an exclusive focus on marijuana stocks.

“It wasn’t until sort of the early part of 2017 were we felt there was enough names at the time about 15 stocks to allow us to launch an ETF that would give everyone a one ticket diversified solution to buying marijuana stocks,” Mark Noble, senior vice president of ETF strategy with Horizons ETFs previously told INN.


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The index crossed the C$1 billion mark in assets under management in the fund last September.

“HMMJ’s growth has far exceeded our expectations as investors have strongly supported the sector in anticipation of Canada’s upcoming recreational marijuana legalization,” Steve Hawkins, president and CEO of Horizons ETFs, said in a press release.

Some of the recent top stocks in this fund include: Canopy Growth (NYSE:CGC,TSX:WEED), Cronos Group (NASDAQ:CRON,TSX:CRON) and GW Pharmaceuticals (NASDAQ:GWPH).

2. Purpose Marijuana Opportunities Fund (NEO:MJJ)

This fund offers investors trading with an expert voice in hand. The fund is actively managed by Greg Taylor, chief investment officer of Purpose Investments, as a way to combat the risk attached with these stocks.

In February, it was revealed the fund had managed to create returns of 53.43 percent over a one-year time frame since its inception in January 2018.

The firm heavily credited the active management status of the fund as the reason for its gains.

Some of these funds current top stocks include: Organigram Holdings (TSX:OGI,OTCQX:OGRMF), Aurora Cannabis (NYSE:ACB,TSX:ACB) and Hexo (NYSEAMERICAN:HEXO,TSX:HEXO).

“It’s going to be important to run nimble, make sure that you’re not just blindly buying stocks in the sector and not watching them, because there are going to be sudden moves which might catch people off guard,” Taylor previously told INN.


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3. Evolve Marijuana ETF (TSX:SEED)

Evolve ETFs also offers a cannabis focussed ETF to investors. Launched in February 2018, this fund currently counts with 25 stocks in its holdings list.

In March, the firm announced SEED secured a return of 48.48 percent for a one-year period ending in February 28.

“The regulatory landscape in marijuana is developing rapidly as the rules around retail distribution take shape this year,” Elliot Johnson, chief investment officer at Evolve ETFs and portfolio manager for SEED, said.

Johnson credited the active management for the returns of this fund and added this style will be “essential” when picking the stocks of the firms that will dominate the global market.

“Our portfolio construction and risk management processes make us well positioned to take advantage of the changes we expect in the coming year,” he said.

Some of these funds current top stocks include: Aurora Cannabis, Aphria (NYSE:APHA,TSX:APHA) and Canopy Growth.

4. Horizons Emerging Marijuana Growers Index ETF (NEO:HMJR)

With the growth Horizons noticed from its first ETF, the firm went ahead and launched a second one to the public market, on the Aequitas NEO Exchange, a smaller stock exchange in Canada.

This fund is focussed on smaller stocks from cannabis companies with a market cap between C$50 million and C$500 million.


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The Horizons Emerging Marijuana Growers was launched in February 2018.

The fund was designed to target the growers sector of the market underneath the already established marijuana firms.

“We are more excited about the smaller companies in the space,” Noble told INN last November, due to the large valuations on the bigger licensed producers.

Some of these funds current top stocks include: TerrAscend (CSE:TER,OTCQX:TRSSF), The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) and Emerald Health Therapeutics (TSXV:EMH,OTCQX:EMHTF).

Investor takeaway

All of these cannabis funds enjoy uniqueness in the market since a portfolio manager in the Canadian public market doesn’t see any more marijuana stock-centric indexes launching soon.

“I don’t think there’s enough demand, just right now,” Nawan Butt, portfolio manager with Purpose Investments, previously told INN.

He said the market landscape for marijuana funds is “limiting” when asked about the possibility of his firm launching a second fund in the future.

However, with the emergence of the hemp industry in the US and the continued rise of US-based companies with Canadian cannabis stocks, more funds could appear in the future.


Want more details? Check out these articles for more INNdepth coverage.

Want an overview of investing in cannabis stocks? Check Investing in the Cannabis Industry

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 contributed article. 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.


Cannabis - Will The Fortune 500 Join The Party?

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US cannabis received a boost this week with a policy move that may hint at future changes.

Meanwhile, Amazon (NASDQ:AMZN) threw its full support behind cannabis reform in the US by way of a public post confirming the company’s acceptance of the drug.

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  • Research findings originated from cannabinoid-based collaboration with leading epilepsy researcher, Dr. Peter Carlen, at UHN that is also supported by a Mitacs Accelerate program grant.
  • Avicanna’s proprietary formulation showed promising pre-clinical results in reducing seizures and will be developed through the company’s pharmaceutical development pipeline as an epilepsy drug candidate.


Avicanna Inc. (” Avicanna ” or the ” Company “) (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN) a biopharmaceutical company focused on the development, manufacturing and commercialization of plant-derived cannabinoid-based pharmaceuticals is pleased to announce that it has filed a provisional patent application with the United States Patent and Trademark Office, entitled “Methods for Reducing or Eliminating Incidence of Seizures and Sudden Unexpected Death in Epilepsy”, on the use of a novel cannabinoid formulation (the “ Formulation Candidate ”).

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Cannabis legalization in Canada helped kickstart a financial revolution in the stock market with the launch of a diverse portfolio of marijuana firms.

With the boom of public cannabis businesses in full swing, are you thinking about investing in cannabis companies? If so, consider starting your journey here.

A wide spectrum of marijuana stocks have made their mark in the global industry thanks to the amount of money raised from investors and the attention the sector is getting from established industries.


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What’s to come is anyone’s guess, but it seems this new and burgeoning industry is still in its early days, with diverse nations beginning to move forward with plans for legalizing marijuana.

That means there’s likely still money to be made in cannabis stocks as the market builds and cannabis products expand in availability over the next few years.

There are many differing opinions about how much the global legal cannabis market will be worth in the years to come, with estimates including US$70.6 billion by 2028 and US$91.5 billion by that same year.

But one thing is almost certain: The market is set to grow as opinions surrounding the plant evolve over time and as platforms crop up to supply different consumption preferences. And all of that will mean more cannabis investment opportunities with both existing companies and future entries to the market.

For now, let’s take a look at where you can invest your money at this point in time.

How to invest in cannabis: Canadian cannabis stocks

First thing’s first: Canada. This is the obvious place to start as marijuana is legal at the federal level and Canadian cannabis stocks are less likely than their US counterparts to suffer from political volatility.

That said, due to the uncertainty of investing in the US marijuana space, where the drug is not legal at the federal level, Canadian firms have been forced to make choices about how they operate. For example, Canada’s senior exchanges do not allow companies with American cannabis assets to list.

While the Canadian cannabis space continues to face challenges, investors are eagerly watching as companies move into the edibles and beverages markets and develop new products.

For lists of Canadian marijuana stocks to consider, click here.


Cannabis Market Could Reach $5.5B By End Of Year

Experts Weigh In On Our Exclusive FREE Report. Can You Afford To Miss Out?

How to invest in cannabis: US cannabis stocks

Although some US states have legalized cannabis, American cannabis stocks may be riskier than those in Canada due to federal restrictions on the sale and cultivation of cannabis.

However, as the saying goes, the greater the risk, the greater the possible reward. The US market could grow up to US$43 billion by 2025, and that’s not even including the size of the market if nationwide legalization happens. It’s easy to see that US cannabis stocks could inherit a huge chunk of the pie if federal law finally legalizes the commodity.

All in all, picking the right US cannabis stocks could mean massive gains if the plant is ultimately legalized federally. It’s worthwhile for investors to do their research and to be aware of the risks and potential benefits involved in investing in the space.

For a list of US cannabis stocks to consider, click here.

How to invest in cannabis: A side note

Many companies in the cannabis space have begun to veer in one direction or another.

For example, some of the largest marijuana producers have moved towards deals with beverage or pharmaceutical companies for the production of novel new products. Others in the space continue to pursue innovation in the recreational market.

The beverage side in particular has seen interest from companies, with cannabis firms partnering with brew businesses. One example is Canopy Growth (NYSE:CGC,TSX:WEED), which has teamed up with Constellation Brands (NYSE:STZ), a leading producer in the alcoholic beverage industry.

It’s important to be aware that each niche has its own possibilities and challenges. For instance, while many market participants are convinced of the promise in beverages, these drinks have been hampered by strict marketing rules, among other factors.

Another aspect to consider is whether to pursue big caps or small caps. That has a lot to do with personal comfort. While big caps are often regarded as more stable than small caps, in the cannabis industry there’s been considerable volatility.


Cannabis Market Could Reach $5.5B By End Of Year

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How to invest in cannabis: Cannabis ETFs

If you really know your cannabis companies, then you could enjoy larger gains by simply investing in those specific firms. However, if you aren’t overly familiar with the cannabis space or you are new to it, it could be a good idea to check out the cannabis exchange-traded funds (ETFs) available.

A cannabis ETF gives you exposure to several different cannabis stocks and takes the guesswork out of cherry picking which stock to bet on. One issue with ETFs is that like any other group dynamic, if one stock drops off it brings the whole fund down proportionally with it. Of course, the opposite is also true.

Recently investors have seen the addition of new ETFs offering exposure to the US market, including firms with entries into the hemp space, thanks to the sales of CBD products.

For a list of cannabis ETFs to consider, click here.

How to invest in cannabis: Final thoughts

No matter which way you slice it — or grind it, in this case — the cannabis market is an exciting business to invest in right now. Whether you invest in cannabis ETFs or Canadian or US marijuana stocks, or if you’re still waiting on the sidelines for more maturity from the types of cannabis companies trading, this industry is one to watch, and one that looks like it’ll keep climbing in the future.

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