Innovation Shares debuted The Cannabis ETF on Monday, describing it “as the first passively managed pure-play ETF” aimed at cannabis investing.
THCX will follow the Innovation Labs Cannabis Index, a cap-weighted benchmark, which is a portfolio of 35 stocks expected to benefit from growth of the hemp and legal marijuana industries.
Matt Markiewicz, Managing Director, Innovation Shares, said its goal in launching THCX is to provide a low-cost and diversified vehicle to meet increasing investor appetite for cannabis-connected stocks.
“With the global cannabis market estimated to reach $630 billion by 2040 up from $12 billion today, there is an exciting opportunity for investors to participate in this multi-decade growth story through the tax efficient structure of an ETF,” Markiewicz said.
“The Innovation Labs Cannabis Index is a proprietary rules based equity index,” according to the index provider. “The portfolio consists of global companies that have a business interest in the legal cannabis, hemp or CBD-based pharmaceutical, consumer product & wellness markets.”
Currently there are 11 U.S. states where recreational marijuana is legal: Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington, and Washington D.C.
THCX comes with an expense ratio of 0.70%, or $70 on a $10,000 investment, making it the cheapest of the US-listed cannabis ETFs.
“Companies included in the index are shown to be Arena Pharma, Aurora Cannabis, Canopy Growth, Cronos, Hexo, Organigram, PerkinsElmer, PharmaCielo, Scotts MiracleGro, Tilray, Village Farms and others,” reports 24/7 Wall Street.
The legal cannabis market in the U.S. is still in its formative stages. Roughly a quarter of the 50 states and Washington, D.C. have legalized marijuana for recreational purposes and almost half have legalized it for medicinal use. Recent data indicate many Americans support cannabis legalization.
Other issuers have filed plans for marijuana ETFs, including Global X.
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