The entire country of Canada will be the new home for a completely legal marijuana industry in 2018. And investor dollars from both sides of the border begin to move.
With recreational marijuana in California on its way towards legalization, American investors and entrepreneurs are swooning over the potential for profit. But Canada’s movement towards a nationwide marijuana industry has stolen some of that attention. Deloitte estimates the Canadian market will reach at least $5B in sales in 2018. In addition, an adjacent market of associated goods and services could represent another $20B. California has got some catching up to do.
CannaRoyalty is a company looking to capitalize on these potential figures. The company holds investments in about 20 legal marijuana companies in the U.S. and Canada. But medical marijuana is still illegal federally in the states, which means some of their investments have political risk. Nevertheless, CEO of CannaRoyalty Mark Lustig still believes this is the opportunity of a lifetime. He says,
“Recreational cannabis use could be as big as alcohol, and research will discover medically transformative effects.”
Lustig launched his portfolio three years ago, with the hope to offer investors a foothold in an emerging industry. On top of that, the portfolio strives to mitigate risk by diversifying product type, geography, and financing types. It focuses on brands and assets that will not become commoditized like raw cannabis production could. Investments range from manufacturers to processors but also ranges to companies that don’t even touch the plant. Lustig also lists two areas that could explode,
“Edibles and beverages get a lot of press.”
Canadian Firm tackles Cannabis Industry with first ever Marijuana ETF: HMMJ
Large investment firms have been slower to the party. Political risk and largely inflated share prices are main reasons for their choice exclusion. However, Horizons ETFs blazed a trail for the Canadian cannabis industry. They offer the world’s first ETF that provides direct exposure to North American-listed securities involved with marijuana bioengineering and production: HMMJ.
The Index is designed to provide exposure to listed life sciences companies with significant business activities in the marijuana industry. It selects from a current universe of companies that have operations in biopharmaceuticals, medical manufacturing, distribution, bio-products and other ancillary businesses related to the marijuana industry.
Recently, HMMJ executed a quarterly rebalancing that saw 11 new offerings added to the ETF. In the last 5 months, HMMJ’s share price has increased by 70%. Steve Hawkins CO-CEO of Horizons ETFs had this to say about the expansion and growth,
“Cannabis has been one of the newest and fastest-growing asset classes of 2017, presently valued at approximately $23 billion. The expanded portfolio of HMMJ demonstrates how quickly this sector has evolved. It is now considered a long-term, domestic investment opportunity for Canadian investors.”