Thematic ETFs have a long and storied history in the ETF ecosystem, offering investors ways to make sector bets, for example, or, craft a bespoke allocation with individual building blocks. Marijuana ETFs, with their retail appeal, are one of the standout thematic ETF categories when it comes to investor familiarity, and they may be poised for a surge to close out the year as the U.S. Supreme Court considers the legality of marijuana.
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The court has already scheduled a meeting to discuss the pending case to overturn the Federal prohibition on marijuana. That December 12th conference precedes a potential decision on whether to take the case or not in January. Should the court potentially rule in favor of easing marijuana regulations, that would be a significant boon to the broader marijuana industry.
Marijuana ETFs to Watch for Regulation News
Marijuana ETFs have already seen some increased interest and performance since the initial news. The Roundhill Cannabis ETF (WEED), for example, has seen its performance rebound following a mostly down year. The ETF has returned 16.1% over the last five days per YCharts following just under -1% performance on a YTD basis.
The AdvisorShares Pure US Cannabis ETF (MSOS) has also performed well following the news, returning 16% in the same time frame per YCharts. MSOS has returned 1.1% YTD according to ETF Database data.
Each of the marijuana ETFs provides its own route to marijuana industry exposure. WEED is currently charging zero basis points (bps) for its exposures, having waived its fee until at least May 1st, 2026. MSOS, meanwhile, asks a 78 bps net fee for its services.
WEED actively invests in global cannabis and hemp stocks with the added benefit of total return swaps to boost performance. The strategy invests in direct weed and hemp firms as well as REITs active in the industry. Those marijuana firms include producers, business to consumer providers, and business to business companies, as well.
MSOS meanwhile also actively invests in the space. The ETF invests in so-called “multi-state operators,” or MSOs, while also using swap contracts targeting the weed and hemp industries.
The future of cannabis regulation in the United States remains unclear. However, the court taking a closer look at the matter, and potential bipartisan movement in the future, may boost the case for marijuana ETFs overall.
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