Adult-use cannabis sales kick off in Canada on Wednesday, October 17, and many investors already feel like they’re late to the party. That’s ok, because the green rush is just getting started.
Canada is only the second nation to legalize marijuana, and has a population of less than California. That being said, Canadian licensed producers like Flowr Corp. (TSXV:FLWR) and Canopy Growth Corp. (NYSE:CGC) (TSX:WEED) are positioning themselves to be global leaders in the cannabis space given their partnerships with global industry leaders like The Scotts Miracle-Gro Company (NYSE:SMG) and Constellation Brands (NYSE:STZ), respectively.
They are not just building infrastructure in Canada, but rather they are building a platform that can allow them to cash in on the cannabis boom worldwide.
Still More Opportunity to Come
Even though the licensed producers above already have noteworthy partnerships with existing global titans, there will be more to follow.
Despite rumors such as the one regarding a deal between Marlboro cigarette-producing Altria Group (NYSE:MO) and Canadian licensed producer Aphria Inc. (TSX:APH) (OTC:APHQF), it it actually impossible to know which cannabis companies will be strategic investment/acquisition targets for Fortune 500s.
Because of the guessing game that most marijuana investors are faced with, it can be easier to invest in an exchange traded fund (ETF) that offers exposure to a wide variety of cannabis companies.
If you are not tracking the markets on a daily or intraday basis, then buying a diversified basket of cannabis stocks via an ETF is going to be far more fruitful than trying to pick winners out of a hat.
What is an ETF?
An ETF, short for Exchange Traded Fund, is a free-trading security that tracks an underlying benchmark. Benchmarks can be an index like the S&P 500, the price of oil, or anything in between. In the case of cannabis ETFs, they track baskets of marijuana stocks rather than the price of marijuana itself.
3 ETFs Offering Investors Exposure to the Canadian Green Rush
- The ETFMG Alternative Harvest ETF (NYSE:MJ) is a marijuana-focused index-based ETF that holds major stakes in companies ranging from Canadian licensed producers of cannabis to companies like GW Pharmaceuticals Plc. (NASDAQ:GWPH) which has an FDA-approved cannabinoid-based drug. By tracking an index, the portfolio is selected by predetermined quantitative and qualitative factors rather than a portfolio manager.
- The Evolve Marijuana ETF (TSX:SEED) (OTC:EVVLF), on the other hand, is an actively-managed ETF, which means that the portfolio of cannabis companies that it invests in is based on a professional money manager’s decision.
- The Horizons Emerging Marijuana Growers Index ETF (NEO:HMJR) (OTC:HZEMF) seeks to replicate, to the extent possible, the performance of the Emerging Marijuana Growers Index, net of expenses. Compared to the other ETFs mentioned above, this one particularly focuses on small-capitalization companies (up-and-comers) primarily involved in the cultivation, production and/or distribution of marijuana.
With Canadian legalization kicking off on Wednesday, there’s still time to get into the green rush early. We’re still only in the third inning.
This article does not provide nor claim to provide individual investment advice or recommendations to readers. Before making specific investment decisions, readers should seek their own professional advice and that of their own professional financial adviser