The Leading Cannabis ETFs to Consider in 2024
Cannabis ETFs are garnering attention in 2024 as the industry shows promising growth. Key players like MJ, MSOS, and CNBS dominate this sector. These ETFs offer diversified exposure to cannabis-related stocks. This includes companies involved in cultivation, production, and retail. The U.S. cannabis industry has seen remarkable growth. Statistics reveal a projected market size of over $30 billion by 2025. This growth is fueled by expanding legalization and increased consumer acceptance. Investors are increasingly attracted to this sector for its high-growth potential. However, the industry faces regulatory challenges and market volatility.
Investors should approach Cannabis ETFs with robust technical analysis and risk management. Technical analysis involves studying market trends and stock performance. In general, this helps in making informed investment decisions. Proper risk management is crucial in this volatile sector. It involves setting stop-loss orders and diversifying portfolios. This mitigates potential losses from any single investment. Investors should also stay updated on regulatory changes. These can significantly impact the market. With the right strategies, Cannabis ETFs can be a valuable addition to a diversified investment portfolio.
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The Must-Watch Cannabis ETFs of 2024
- AdvisorShares Pure US Cannabis ETF (NYSEArca: MSOS)
- Amplify Growth Opportunities ETF (NYSEArca: CNBS)
- ETFMG Alternative Harvest ETF (NYSEArca: MJ)
The AdvisorShares Pure US Cannabis ETF (MSOS)
The AdvisorShares Pure US Cannabis ETF (MSOS) stands out in the cannabis investment landscape. It’s the first U.S.-listed actively managed ETF focused on American cannabis companies. MSOS offers exposure to multi-state operators (MSOs) in the cannabis industry. These operators are involved in cultivation, production, and retail of cannabis in various states. The ETF’s portfolio includes companies with a significant presence in key U.S. markets.
MSOS’s investment strategy is focused on states with the largest cannabis markets. These include California, Colorado, and Florida. California, known for its vast cannabis market, is a primary focus. Companies in MSOS’s portfolio operate numerous stores across these states. Exact store numbers vary, reflecting the dynamic nature of the industry. MSOS aims to capitalize on the growing legalization trend in the U.S. Its strategy is to invest in companies poised for growth as the legal landscape evolves.
Top Holdings Analysis
The ETF’s largest holding is Green Thumb Industries (GTBIF) at 26.01%. This is followed by Curaleaf Holdings (CURLF) at 20.15%, Verano Holdings Corp (VRNOF) at 11.88%, Trulieve Cannabis (TCNNF) at 10.98%, and TerrAscend Corp (TRSSF) at 9.57%. Other notable holdings include Cresco Labs Inc (CRLBF), Columbia Care Inc (CCHWF), Glass House Brands (GLASF), Jushi Holdings Inc (JUSHF), and Ayr Wellness Inc (AYRWF). These holdings represent a diverse cross-section of the US cannabis industry, from production to retail.
Potential Impacts on Stock Price
The MSOS ETF’s concentration in top MSOs suggests confidence in these companies’ market leadership and growth potential. This focus might impact stock prices positively, as these firms are likely to benefit most from industry growth and regulatory changes. However, the high concentration also implies increased risk. Performance is heavily dependent on a few key players.
Investment Cases
Bullish Case: The bullish view sees the ETF’s concentration in top MSOs as advantageous. These firms are well-positioned to capitalize on industry growth and potential federal legalization. Their market leadership could translate into significant returns.
Bearish Case: The bearish perspective highlights the risks of concentration. Regulatory hurdles, market volatility, or individual company issues could disproportionately affect the ETF.
Balanced Case: A balanced view appreciates the ETF’s focus on established market leaders while acknowledging the risks of concentration. It suggests a cautious approach, considering the evolving regulatory landscape and market dynamics.
MSOS ETF closed at $7.99 on January 18th, up 25.63% in the past month of trading. This ETF is up 13.98% year to date, with a 52-week price range of $4.78-$9.88.
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Amplify Seymour Cannabis ETF (CNBS)
The Amplify Seymour Cannabis ETF (CNBS) is a key player in the cannabis investment arena. Launched in 2019, it’s managed by veteran investor Tim Seymour. CNBS primarily invests in global cannabis companies, focusing on growth opportunities. Unlike MSOS, CNBS isn’t limited to U.S. companies. It includes firms from Canada, the UK, and Israel, among others.
CNBS’s portfolio spans various segments of the cannabis industry. This includes cultivation, biotechnology, and retail. Its international focus allows exposure to markets outside the U.S. For instance, Canadian companies in CNBS operate numerous stores across Canada. In addition, the ETF also includes firms with a significant presence in European and Israeli markets. This global approach positions CNBS to capitalize on worldwide cannabis industry growth. It’s well-suited for investors seeking diversified international exposure in the cannabis sector.
The ETF’s portfolio is diverse, reflecting various segments of the cannabis industry. Its top holding is Invesco Short-Term Investment Government & Agency Institutional (AGPXX) at 20.11%. This is followed by Tilray Brands Inc (TLRY) at 10.39%, and Jazz Pharmaceuticals PLC (JAZZ) at 6.39%. GrowGeneration Corp (GRWG) and WM Technology Inc (MAPS) also hold significant positions at 5.42% and 5.02% respectively. Cronos Group Inc (CRON) is another notable holding at 4.70%.
Potential Impacts on Stock Price
The ETF’s diversified portfolio may mitigate risk compared to more concentrated funds. Its exposure to a wide range of cannabis-related businesses, including US MSOs, positions it to benefit from broad sector growth. However, the cannabis industry’s volatility and regulatory uncertainties remain factors that could influence stock prices.
Investment Cases
Bullish Case: The bullish argument emphasizes the ETF’s diversified investment in the cannabis sector. This diversification, combined with exposure to growing US MSOs, positions the ETF to capitalize on the expanding global cannabis market.
Bearish Case: From a bearish viewpoint, the cannabis industry’s inherent volatility and regulatory challenges could negatively impact the ETF. Its performance is tied to an industry still finding its regulatory and economic footing.
Balanced Case: A balanced perspective recognizes the growth potential of the cannabis industry while acknowledging its risks. It views the ETF’s diversification as a strength, offering a more stable investment in a turbulent sector. However, it advises caution given the regulatory uncertainties and market fluctuations in the cannabis space.
On January 18th, the CNBS ETF finished at $4.57, up 14.54% in the last month of trading. In this case, the ETF is up 7.03% year to date, with a 52-week price range of $3.38-$5.98.
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ETFMG Alternative Harvest ETF (MJ)
ETFMG Alternative Harvest ETF (MJ) is a prominent ETF in the cannabis sector. Launched in December 2015, it was the first cannabis ETF in the United States. MJ primarily invests in companies across the global cannabis industry. This includes exposure to cultivation, production, and distribution sectors. MJ’s portfolio covers a range of cannabis-related companies, from growers to biotech firms.
A key feature of MJ is its dividend distribution. This ETF offers investors regular dividend payments, a rarity in the cannabis sector. As of my last update, MJ’s dividend yield was competitive in the ETF market. This makes it an attractive option for income-seeking investors. MJ provides broad exposure to the cannabis market. This includes North America, Europe, and other regions where cannabis legalization is advancing. Its diverse portfolio makes it a go-to choice for investors seeking global cannabis industry exposure.
Portfolio Composition
MJ’s portfolio showcases a unique mix of holdings. Its largest is the ETFMG US Alternative Harvest ETF (MJUS), comprising 52.79% of the assets. The ETFMG Sit Ultra Short ETF (VALT) follows at 8.89%. Tilray Brands Inc (TLRY) holds 8.68%, and SNDL Inc (SNDL) comprises 6.05%. Other significant holdings include Cronos Group Inc (CRON), Chicago Atlantic Real Estate Finance Inc (REFI), Aurora Cannabis Inc (ACB), Canopy Growth Corp (WEED), OrganiGram Holdings Inc (OGI), and High Tide Inc (HITI).
Potential Impacts on Stock Price
MJ’s substantial investment in MJUS indicates a strategy focused on US cannabis markets. This could be advantageous as the US market expands. However, the concentration in a single ETF poses a risk. The diverse nature of the remaining holdings may mitigate this, offering stability through sector-wide exposure.
Investment Cases
Bullish Case: The bullish perspective views MJ’s large size and US focus as strengths. These factors, along with its exposure to various aspects of the cannabis industry, position it well to capitalize on sector growth.
Bearish Case: The bearish view focuses on the risks of MJ’s heavy concentration in MJUS. Market volatility and regulatory uncertainties in the cannabis industry could negatively impact the fund.
Balanced Case: A balanced view recognizes MJ’s potential to benefit from the growing cannabis industry while noting the risks of its concentrated holdings. It suggests a cautious investment approach, mindful of the evolving landscape and inherent volatility of the cannabis market.
MJ ETF closed on January 18th at $3.30, up 8.82% in the last month’s trading. In this case, MJ ETF has a 52-week price range of $2.64-$4.84 and is up 3.10% year to date.
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Top Cannabis ETFs for 2024 Investment Strategies
Top Cannabis ETFs, such as ETFMG Alternative Harvest ETF (MJ), AdvisorShares Pure US Cannabis ETF (MSOS), and Amplify Seymour Cannabis ETF (CNBS), offer diverse ways to invest in the cannabis industry. These ETFs provide exposure to a range of companies in cultivation, biotech, and retail. A unique feature of some, like MJ, is their dividend distribution, appealing to income-focused investors. In general, these ETFs represent a long-term opportunity, capitalizing on the industry’s growth potential. As legalization expands globally, the cannabis market is expected to grow significantly.
Investors in Cannabis ETFs should employ technical analysis and proper risk management. Overall, technical analysis helps identify market trends and potential entry or exit points. It involves analyzing price movements and trading volumes. Risk management is crucial, given the industry’s volatility. In addition, this includes setting stop-loss orders to limit potential losses. Diversifying investments across different ETFs can also mitigate risks. Investors should stay informed about regulatory changes, as these can greatly impact the market. With careful strategy, Cannabis ETFs can be a valuable part of an investment portfolio.
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