Pot stocks and marijuana ETFs grew Wednesday after Canada’s parliament legalized recreational marijuana.
The ETFMG Alternative Harvest ETF (NYSEArca: MJ) rose 1.5% and the AdvisorShares Vice ETF (NasdaqGM: ACT) gained 0.9% on Wednesday.
Canada’s Senate approved a bill from Prime Minister Justin Trudeau’s government to legalize cannabis, reports Jen Skerritt for Bloomberg.
The move “paves the way for legal sales to begin,” Bloomberg Intelligence analyst Kenneth Shea said Wednesday in a report. “We expect investment flows into the nation’s legal cannabis sector to jump, deal activity and consolidation to rise.”
Bolstering Marijuana Stocks
The new bill could bolster marijuana stocks and fuel more investment into the nascent industry as Canada becomes the first Group of Seven nation to legalize recreational marijuana. GMP Securities analyst Martin Landry argued that the bill could be the “catalyst the industry has been waiting for” for several years and legalization will increase the potential market for Canadian producers by 10 times the existing medical market.
Related: Horizons ETFs Files for 3 Canada Marijuana ETFs
The ETFMG Alternative Harvest ETF, the first U.S. ETF solely targeting the cannabis or marijuana industry, includes a hefty 61.8% tilt toward Canadian companies, along with a 20.6% tilt toward U.S. companies. MJ includes exposure to some of upstart Canadian companies that could benefit from the new legalized status of cannabis, including a 5.7% position in Canopy Growth, which surged as much as 6% Wednesday.
While not solely targeting the cannabis industry, the AdvisorShares Vice ETF includes companies that derive at least 50% of their net revenue from the marijuana and hemp industry or have at least 50% of their company assets dedicated to lawful research and development of cannabis or cannabinoid-related products. Specifically, the fund includes a 20% position to cannabis-related companies.
For more information on the markets, visit our current affairs category.