Up nearly 45% this year, the ETFMG Alternative Harvest ETF (NYSEArca: MJ) is one of 2019’s best-performing non-leveraged exchange traded funds.
As the rules and regulations around marijuana begin to loosen, with improving sentiment on the recreational usage on the once highly guarded drug, more businesses are starting to dabble and expand the cannabis industry, and investors can also access the growth opportunity through related exchange traded fund strategies.
Indeed, increased legalization of cannabis, be it medicinal or recreational, is a major catalyst for MJ and cannabis stocks, but another catalyst could be a major growth driver for this market segment: the cannabidoil (CBD) market.
“The CBD market could represent a $16-billion opportunity by 2025, according to a report issued Monday by a team of Cowen analysts,” reports ETF Daily News. “The findings are based on a roughly 40-percent increase in consumer incidence with the average user spending $640 — or less than $2 per day — each year.”
What’s Next MJ ETF
In the U.S., MJ is getting a lift from speculation that more states will legalize marijuana for either recreational or medicinal use and that Congress and the White House could soften their stances on the drug being illegal at the federal level. California, Colorado, Nevada and Washington are among the states with thriving legal cannabis industries.
Cowen believes “CBD use will grow 10 percent among adults, totaling around 25 million consumers by 2025,” according to ETF Daily News.
“We can envision a scenario where a consumer that uses a CBD tincture or capsule may also be inclined to convert his or her beauty regimen to include CBD (e.g., CBD infused beauty products), and/or use a topical for targeted relief as well,” according to the Cowen report.
Corporate America is eyeing the cannabis trade. For example, Marlboro cigarette maker Altria announced a $1.8 billion investment into a grower after Corona brewer Constellation Brands invested almost $4 billion into nascent industry, the Wall Street Journal reports.
“Dissecting the industry a bit more, Cowen said it anticipates health and wellness to lead the market, with nutraceuticals earning $6.4 billion and topicals generating another $4 million. Smaller markets like food, beverages, beauty and vapor are all expected to have sales between $1 billion and $2.5 billion in the same time frame, in the sell-side firm’s view,” according to ETF Daily News.
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