Tag Archives: cannabis etf

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Canada Stock Exchanges Weigh Walk-Back re Cannabis Share Listings

Canada stock exchange regulators appear to be suffering from a pot-hangover, as exchange execs and regulators re-visit criteria for cannabis share listings. Its a high-flying industry for sure; 69 publicly-traded cannabis companies with aggregate market cap of USD $6.4bil have their shares listed on the Toronto Stock Exchange, the smaller TSX Venture Exchange and the Canadian Securities Exchange. According to private placement specialist firm Prospectus.com, during the most recent 2-3 years, upwards of 300 ‘established entities’ have advanced private placement offerings that have raised nearly $1bil from private equity firms, venture capital shops and other sophisticated investors. When considering that North American sales of legal cannabis, which generated $6.7 bil in 2016  is growing at a rate of 30% YoY, its no surprise that cannabis entrepreneurs and their investors are stoking for public share listings, an avenue that provides a publicly-traded currency for them to expand and acquire others, and enables investors to benefit from greater liquidity of their holdings. That said, according to senior attorneys at Phoenix OTC Services,  “Cannabis share listings are certainly being sought by a broad spectrum of private companies, but Canada stock exchanges, which host the majority of public cannabis companies, appear to be suffering from a “pot hangover” as senior exchange executives and Canadian regulators are now weighing a walk-back on listing criteria to address fears these companies could be violating US securities laws.”

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Horizons Medical Marijuana Life Sciences ETF

While some ETF industry players continue to plot courses behind the scenes to follow the path of TSE-listed Horizons Medical Marijuana Life Sciences ETF (TSE: HMMJ) in an effort to create their own cannabis-flavored exchange-traded funds, some cannabis industry legal experts are bracing for Canadian securities regulators to try and “put the genie back in the bowl” and possibly de-list companies that are viewed to be running afoul of US laws.

According to 14 Sept story in the WSJ,  the parent company of the Toronto Stock Exchange and an umbrella organization of Canadian securities regulators are looking at cannabis companies with U.S. operations—including growers, medical-marijuana distributors and pharmaceutical firms whose products include marijuana ingredients—to determine whether trading in their shares should be allowed to continue on Canadian exchanges.

The regulatory attention comes as the Toronto Stock Exchange and its smaller rival, the Canadian Securities Exchange, have been actively courting marijuana company listings from around the world. At present, roughly half the trading activity on the Canadian Securities Exchange is sourced from marijuana-based businesses, a high-growth sector that is expected to become a $50 bil global industry within the next 7-10 years. (Source: WSJ)

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Put this Cannabis Fund in Your ETF Pipe

Cannabis cures all kinds of ailments (so they say..), but whether the plant-based elixir is framed as ‘medical marijuana’ or “recreational marijuana”, investing in a nascent stage, a fast growing enterprise, or even a cannabis fund that capitalizes on pot companies can be problematic, particularly via US exchanges. So, to borrow a phrase from Horace Greeley, MarketsMuse exchange-traded fund curators say “Go North, Investors, Go North!” Pass “GO” and head straight to Canada’s Toronto Stock Exchange (TSE), where you can imbibe on Horizons Marijuana Life Sciences ETF (HMMJ.TO).

With $120 million in AUM, Horizons Marijuana Life Sciences ETF  is the first exchange traded fund in North America that focuses on the legal marijuana market.  Launched in April on the TSE, it has no U.S. competitors,  as federal law prohibits the drug, making it difficult to set up a cannabis fund or a marijuana etf that includes companies that grow and/or legally distribute wacky weed or derivative products.

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Steve Hawkins, Horizons ETF

As noted by Reuters’ David Randall in his Aug 7 profile of HMMJ and interview with Steve Hawkins, Horizons ETF co-CEO and the Issuer behind HMMJ, “Canada, is gearing up to legalize recreational use of cannabis by July 2018, and that legislation is expected to bolster investment opportunities in an industry that will be catering to 20 million+ Canadian adults aged 20-65.”

So, aside from the direct constituents of the companies that cater to the cannabis trade, the natural question is, what are the constituents of this so-called cannabis fund aka Marijuana ETF? Notes Reuters, “With positions including marijuana grower Aurora Cannabis Inc (ACB.TO), medical marijuana companies such as GW Pharmaceuticals Plc (GWPRF.PK), and fertilizer company Scotts Miracle-Gro Co (SMG.N), the fund attempts to capture the full extent of the Canadian marijuana industry, which Deloitte expects could grow to $22.6 billion if the recent bill to legalize recreational use is successful.  Scotts Miracle-Gro is a part of it because they have been extremely public about their investment in the growth of the marijuana industry going forward with respect to hydroponics and specialized fertilizer. Then there are biopharm companies which are not specifically marijuana growers or distributors but are involved directly or indirectly in a derivative.”

According to Israel Frenkel, a securities attorney for private placement and IPO documentation firm Prospectus.com, “We’re administering investor offering documents for several US-based start-ups right now, and at least one of those companies, which is positioned as a combination real estate play and  equipment leasing company would ostensibly be a candidate for HMMJ. Added Frenkel, “Arguably, there are potentially several dozen start-ups in the cannabis space that offer intriguing opportunities for public market investors, but only when the US Federal Govt gets its house in order and accepts the notion that Volstead Act didn’t stymie the spirits industry, it merely inspired a whole set of work-arounds that left out paying taxes to the US Treasury. ”

Prospectus.com team of capital markets experts and securities lawyers specialize in preliminary offering prospectus, secondary offering prospectus and full menu of financial offering memorandum document preparation. More information via this link

What’s Next?: ETF For Pot Stocks

potstocks  Excerpts courtesy of John Burke, Wall Street Stock Selector

On New Year’s Day of 2014, the sale of recreational marijuana became legal in the State of Colorado and as a result, “pot stocks” got quite high.  Many of you probably were not even aware that “pot stocks” were being traded.  Back in 2009, Medical Marijuana Incorporated (OTC:MJNA) was the first Initial Pot Offering.  In February of 2014, there are a number of publicly-traded companies involved in the sale of marijuana.  As a result, we may eventually see an ETF based exclusively on marijuana-related stocks.

In the meantime, a number of investors are taking a close look at the ever-growing list of companies which are involved in the sale of legal marijuana.  None of these companies are listed on any major exchange and many of them are literally “penny stocks”.  Nevertheless, the day may soon arrive where the retail investor could avoid the trouble of researching the multitude of cannabis companies by simply buying shares in a pot ETF and allowing the fund manager to separate the “good stuff” from the stems. FOR THE FULL ARTICLE, PLEASE CLICK HERE