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First Cannabis ETF Hits Market and Rises Sharply in Initial Trading

Marijuana is likely to be legal throughout Canada next year and the markets are eager to get in on the ground floor.
First Cannabis ETF Hits Market and Rises Sharply in Initial Trading
Image credit: AHPhotoswpg | Getty Images

Canada continues to trail blaze when it comes to legal marijuana, with national legalization on the table in 2017 and even Snoop Dogg traveling north of the border to partner with an Ontario-based marijuana company.

Now, Canada also has the first Exchange Traded Fund (ETF) available on a major stock market.

The Horizons Medical Marijuana Life Sciences ETF (HMMJ) began trading this month on the Toronto Stock Exchange. A passive fund, it seeks to mirror the performance of the Solactive's North American Medical Marijuana Index.

"It's rare that investors get an opportunity to invest in what is essentially an entirely new sector of stocks,” Steve Hawkins, president and co-chief executive officer of Horizons, said in a news release.

Related: Survey Finds Cannabis Users Are Educated, Fit, Sociable and Surprisingly Republican

Investors certainly responded. The HMMJ price increased each day for its first four days on the market.

Marijuana bioengineering

The Toronto-based Horizons is the first ETF manager to offer investors direct exposure to medical marijuana stocks in North America. These include companies that are working on bioengineering and production of marijuana.

The ETF includes 16 companies as of March. The biggest percentage – 10 percent – is held in each of the following companies:

  • Scotts Miracle-Gro Company
  • GW Pharmaceuticals
  • Canopy Growth Corporation
  • nsys Therapeutics, Inc.
  • Aurora Cannabis Inc.
  • Aphria Inc.

“At Horizons, we take pride in our innovation, so we're very happy that for the first time, investors will be able to access a low-cost, diversified portfolio of companies that are directly involved in the rapidly growing medical marijuana industry,” said Hawkins.

The Horizons ETF has accumulated $28.7 million in assets, according to Market Watch.

More to come.

The Horizons ETF is focused solely on medical marijuana and does not include companies that engage in the legal recreational marijuana industry. Another planned ETF, the Emerging AgroSphere ETF, also will focus on only on companies that engage in medical marijuana production.

The reason for that is simple: marijuana remains illegal in the United States and Canada at the federal level. However, that could change this year in Canada, where Primate Minster Justin Trudeau is expected to introduce legislation making marijuana legal across the nation.

Related: Here's How April 20 Became the 420 of Global Cannabis Significance

That legislation is expected as early as this week and will likely make cannabis legal in Canada beginning in July 2018. Doing so fulfills a promise made by Trudeau during his campaign for primate minister.

A similar view is held by voters at the state level in the United States, where eight states have legalized recreational marijuana and more than half have legalized medical marijuana. However, some members of President Donald Trump’s administration have warned that the federal government may crack down on the legal marijuana industry, although it’s unclear what they might mean.

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