Strategy

Marijuana…There’s An ETF For That

Although the marijuana industry has seen many ups and downs, with volatility resembling the crypto space, just like the crypto space, it’s representing investors, particular young investor with an opportunity to create generational wealth.

Cannabis industry cheerleader Cowen Group, which has arguably been covering pot stocks longer than any Wall Street investment firm, believes that the industry could hit $75 billion in global sales by 2030, which would represent a more than sixfold increase in global sales from 2018, according to data from Arcview Market Research and BDS Analytics.

Meanwhile, Christopher Carey at Bank of America believes that the cannabis industry has the potential to one day hit $166 billion in annual sales.

Source

But just like the crypto space, there will be many losers.  Thus, Electronic Traded Funds (ETFs) give exposure to a group of stocks, thus lowering the investment risk through diversification.  And in the marijuana space, there are three that come to mind:

ETFMG Alternative Harvest ETF (NYSEArca:MJ) is the largest fund to cover the sector.  MJ tracks the Prime Alternative Harvest Index, which tracks the entire cannabis ecosystem across both medicinal and recreational uses. MJ tracks 36 stocks with leaders like GW Pharmaceuticals (NASDAQ:GWPH) and Canopy Growth (NYSE:CGC) as top holdings.

AdvisorShares Pure Cannabis ETF (NYSEARCA:YOLO) takes on a more active approach as it’s run by portfolio manager Dan Ahrens. YOLO currently owns just 26 different marijuana stocks, including Innovative Industrial Properties (NASDAQ:IIPR), CannTrust Holdings (NASDAQ:CTST) and OrganiGram Holdings (NYSE:OGI).

Despite it being the sin ETF, probably the safest of the bunch is the AdvisorShares Vice ETF (NYSEARCA:ACT)  because it invest in alcohol, gambling, tobacco as well as cannabis.   The ETF only has 26% exposure to pot stocks.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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