I have stayed away from the two cannabis ETFs because they are overweight on Canadian operators, especially the big caps, and I do not see the future of cannabis in the Great White North or in any of the companies generating most of their revenue in Canada. (Thanks for the jump start, Canada, now we’re in the driver’s seat.)
What’s a Cannabis ETF?
An ETF, or Exchange-Traded Fun, works basically like a mutual fund, as it purchases stock in different companies; a cannabis ETF focuses on businesses that deal in marijuana, hemp or related products and services. You could just buy the same stocks of an ETF, but that would cost more, because with an ETF you don’t pay a commission for each transaction. Another plus is that an ETF can loan out their stocks to short sellers, earning interest that can enable you to earn money from traders who are betting your stocks will drop.
Current ETFs focusing on mainly Canadian operators are Alternate Harvest (NYSE:MJ) and Horizons Marijuana Life Sciences (NASDAQOTH:HMLSF).
HMUS Launches April 18, 2019
The next cannabis ETF is a portfolio based on an index composed solely of 20 US operators, such as Curaleaf and Cresco Labs. This would be more my style, and something to consider for long-term investors who don’t feel comfortable picking their own stocks or just don’t have the time.
The HMUS ETF begins trading on the Canadian NEO exchange on April 18, which is this Thursday. It is expected to be available as an OTC stock soon. Tickers: HUMUS (Canadian dollars), HUMUS.1 (US dollars).
For more information, see HMUS.
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