Back in December, Benzinga and Viridian Capital Advisors’ president Scott Greiper and vice president Harrison Phillips discussed the possibility of the firm launching a cannabis-focused ETF. At the time, they pointed out their interest in turning their Cannabis Stock Index into an exchange-traded fund but were waiting for the right moment: underlying liquidity of the component companies was not enough at the time.
“If the underlying companies don’t have sufficient liquidity, and you are either selling out of a position or adding a position, you are going to affect the value of the stock. So, the challenge in creating a cannabis index is that, up until the last three months, particularly the three months leading into the November elections and the state voting on cannabis legalization […] we didn’t have the underlying liquidity that was sufficient to support a cannabis ETF,” Greiper explicated.
Two New Marijuana ETFs
Despite the fact that liquidity in the cannabis industry is rising consistently, levels still seem far from high. Nonetheless, a couple investment firms beg to differ.
About two months ago, Managers Group LLC and Horizons ETFs Management announced they had started the process to launch their cannabis ETFs. In early April, one of them debuted in the Toronto Stock Exchange, or TSX.
The Emerging AgroSphere ETF
Back in February, ETF Managers Group LLC (ETFMG) announced its intention to launch a cannabis-focused ETF: the Emerging AgroSphere ETF. The fund would not track weed per se, but instead, legal medical marijuana companies and other businesses in the medical cannabis supply chain.
“The Fund will not invest in any companies that are focused on serving the non-medical marijuana market in the United States, Canada or any other country unless and until such time as the production and sale of non-medical marijuana becomes legal