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.
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
