The cannabis industry has seen a nice uptick following the election. With a Biden administration in place, supportive policies for cannabis use could be a boon for ETFs like the Global X Cannabis ETF (POTX).
POTX seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cannabis Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index.
The underlying index is designed to provide exposure to exchange-listed companies that are active in the cannabis industry (collectively, ” Cannabis Companies”), as defined by Solactive AG, the provider of the underlying index (“index provider”). Overall, POTX gives investors access to:
- High Growth Potential: POTX enables investors to access a basket of high growth potential companies from across the cannabis industry.
- An Unconstrained Approach: POTX’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF Efficiency: In a single trade, POTX delivers targeted access to dozens of companies with significant exposure to the cannabis theme.
Where is the Cannabis Industry Headed?
“While the future is certainly unknown and the policies announced by the Biden Administration are not terribly dissimilar from that of the Trump Administration, due to the social justice movement and the need to increase economic activity, it is likely that the Biden Administration will move forward with new policies that loosen things at the federal level for the industrial hemp and the marijuana sectors of the cannabis industry,” Robert Hoban wrote in Forbes. “Even if it’s slight movement, the industry will respond and will continue to thrive as an essential business during, and after, this pandemic.”
Whatever happens, it should be an interesting four years for the cannabis industry.
“The dynamics in the cannabis sector are really extraordinary,” said Tim Seymour, founder and chief investment officer of Seymour Asset Management on CNBC’s “ETF Edge”. “We saw five new states vote through either adult or medical markets. The top-line growth story is 30-40%. … This is CPG, this is very sophisticated and the country’s in favor.”
“People may or may not believe in what’s going on in the cannabis story, but … this is a national issue,” Seymour said. “More importantly, it’s a very sophisticated consumer product story and active management and being thematic in this space is what we do and it’s working.”
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