Next year could end up to be the best year yet for marijuana stocks. In 2018 we can look forward to both California and the country of Canada legalizing recreational marijuana. The biggest news though, is the first U.S. ETF is launching right before the beginning of the new year. The focus for investors that are involved in the industry has mainly been on both cultivation and the health benefits of cannabidiol (CBD). The Canadian marijuana market is thriving with budding interest from investors in companies such as Canopy Growth (OTCPK:TWMJF) and Aurora Cannabis (OTCQX:ACBFF) which are planting their operations all around the world.
Aurora recently increased stake in Australian CannGroup Ltd., which trades on the Australian Securities Exchange. This new venture brings Aurora’s ownership to 22.9% and will accelerate the Phase III segment of its 172,000-square foot expansion. Canopy Growth has made its mark in the industry with one of its most recent international deals. The S&P 500 Corona maker Constellation Brands (STZ) made a multimillion-dollar investment for a 9.9% stake into the marijuana company. With a company of that magnitude showing its confidence into the marijuana industry, its likely to cause a ripple effect.
Now onto the U.S. Marijuana ETF. Just like any other industry an investment into a fund compared to investing into individual stocks has its pros and cons, yet the marijuana industry could be different. What sets the industry apart is that most marijuana companies are not traded on the major exchanges. Investors will be seeing a fund formulated with a large assortment of penny stocks.
The ETF is not new, the Tierra XP Latin America Real Estate ETF (LARE) has filed to change the focus of its holdings to now track marijuana companies. The marijuana fund, dubbed Alternative Agroscience ETF, is expected to launch on December 26th. The fund will increase the publicity to marijuana-related companies that concentrate on legal cultivation, production, and distribution of products for medical and non-medical applications as well.
The first marijuana-themed ETF was introduced earlier this year in Canada on the TSX. The Horizons Marijuana Life Sciences Index ETF has become increasingly popular and has generated more than $150 million is assets. The last 90 days have also shown a positive move in the market as well with a gain of more than 30% in market value during that time.
As the U.S follows its neighbor up north’s footsteps one has to think if the country is moving towards national legalization as well. Presently, there are 29 states and the District of Columbia that have legalized medical marijuana. Eight states as well as D.C. have legalized recreational marijuana. Although it has not been officially announced legalization seems inevitable, especially because of the much-needed tax revenue.
Last year, about $6.9 billion was generated in legal sales in North America alone. With the global medical marijuana market forecasted to hit $55.8 billion by 2025, the addition of the ETF is a clear sign that Wall Street is ready to get high on profits.
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I want to know how to invest in this