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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.

horizons-cannabis-etf
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

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Marijuana ETF Issuer Tokes On Listing-Trump SEC Head Could Get Stoned

Let’s guess that more than 65% of ETF traders and investors have been clamoring for a marijuana ETF, but just when it seemed to be on the verge of happening, a bunch of folks sponsoring such an exchange-traded fund got hit with what could be a ‘bad high.’ The ink was barely dry on the prospectus filed with the SEC last week by ETF Managers Group LLC for its  Emerging AgroSphere ETF, the proposed first marijuana industry exchange-traded fund and then, “BAM!”–so-called President Donald Trump tweeted yesterday morning that he has charged so-called US Attorney General Jeff Sessions with cracking down on the marijuana industry.  Trump’s plan to stone stoners was confirmed by White House spokesperson Sean Spicer later Thursday afternoon.

Yes, that ‘s right–the creative folks at ETFMG, the sponsor behind the planned pot-flavored ETF apparently didn’t get the memo that among the “traditionalist policies” that country-club mogul-turned-POTUS seeks to advance includes cracking down on cannabis!

That’s all despite the fact more than two dozen U.S. states have legalized some form of marijuana for medical or recreational use and despite support for legalization of marijuana has risen to nearly 60 percent among U.S. adults, according to the Oct 2016 study by Pew Research Center, and let’s not forget the poll released Thursday Feb 24 by Quinnipiac University which showed 71% of Americans oppose efforts to enforce federal marijuana laws in states where it’s legal.

According to ETF Managers Group LLC, the Emerging AgroSphere ETF would give investors an opportunity to buy a group of companies making prescription drugs using cannabis extracts, selling hemp derivatives and other related stocks. The investment company did not disclose a ticker symbol, its fees or a launch date but said the fund will be listed on NYSE Arca. A spokesman for ETF Managers Group LLC declined to comment.  US AG Jeff Sessions, located sipping bourbon at a downtown DC saloon, refused to comment on the news. Also not commenting on whether the SEC filing will pass muster is recently-appointed SEC Commissioner Jay Clayton,  who until his appointment to join the cadre of other Goldman Sachs- connected top advisors to Trump was a partner at law firm Sullivan & Cromwell and a specialist in public offerings and private placements.

The only White House team member who does not stop commenting on anything is spokesperson Sean Spicer, who stated during a Thursday news briefing “I do believe that you’ll see greater enforcement of recreational marijuana and a closer look at medical marijuana as well.”

Despite initial concerns expressed by some within the industry, un-named sources close to the White House have suggested that if they haven’t already, Trump and his inner-circle, including son-in-law Jared Kushner will quickly discover that at least several of Trump’s favorite supporters have close business ties to investors in the cannabis sector, including Trump’s nominee for US Army Secretary and former New York Mercantile Exchange (NYMEX) Chairman Vincent Viola.  The ‘smart money’ with ties to Trump insiders are betting that the recent bluster will have a positive impact on parts of the industry that have been financed by Wall Street top investors, including fintech companies that are entering into the space.

Better known as “Vinny”,  Viola is the Chairman of electronic trading firm Virtu Financial, a $2.5billion market value publicly traded company (NASDAQ: VIRT) Viola, a West Point grad who became a Wall Street billionaire, withdrew his name for consideration soon after being tapped by Trump for the Cabinet-level spot. The walk back was attributed to the financial disclosure process imposed on cabinet-level designates. Viola associates from the NY Merc are investors in Americanex, aka American Cannabis Exchange, a fintech company competing with other upstarts to create a centralized electronic cannabis-trading platform. Americanex, with upwards of $10mil in backing from Wall Street executives, hopes to bring growers, packagers and distributors together in a manner much like that of the world’s leading commodities futures exchange.

““I look at this as an early Nymex,” says Richard Schaeffer, a former chairman of the New York Mercantile Exchange. “I look for this to become a very substantial matching engine bringing buyers and sellers together.”

 

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. The firm’s cannabis market domain expertise includes fluency in state rules, regulations, business plan formation and stock exchange listing for medical marijuana and recreational cannabis companies. More information is available via this link

According to a late Thursday poll by MarketsMuse of more than five dozen Wall Street ETF traders, one common theme prevailed: “Trump must be smoking crack if he thinks he can put the genie back in the bottle when it comes to commercializing cannabis.” One ETF market pioneer (who refused to be named for fear of a POTUS twitter attack) suggested “Jay Clayton could get stoned–with big rocks– if he blocks investors from taking stock in an industry that is on track to create thousands of jobs and deliver new found tax revenue that will result from this rapidly emerging multi-billion industry.”

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