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Marijuana Stocks and ETF: What Investors Need to Know

  • (1: 00 ) - Growth Expectations for Marijuana Industry
  • (3: 45 ) - Is Canada's Legalization A Game Changer?
  • (6: 00 ) - Alcohol and Tobacco Giants Interests In Cannabis
  • (8: 30 ) - Alternative Harvest ETF Overview: MJ
  • (10: 45 ) - In Depth Look At Canopy Growth Corp and Tilray Inc
  • (17: 30 ) - Regulatory Risks and Long Term vs. Short Term Investment
  • (25: 10 ) - Takeaways On The Alternative Harvest ETF
  • Podcast@Zacks.com

In this episode of ETF Spotlight Podcast, I talked with Jason Wilson, president of Budding Equity Asset Management in Canada. Jason is a cannabis industry expert and partner of ETFMG Alternative Harvest ETF MJ , the first and only US listed ETF focused on the marijuana industry.

Canada's legalization of recreational marijuana has generated a lot of excitement around pot stocks. Investments by major alcohol producers and rising M&A activity in the industry have also boosted them.

It was reported today in WSJ that Coca-Cola KO is in talks with Canada's Aurora Cannabis ACBFF to develop cannabidiol infused beverages.

"Cannabis is the biggest investment opportunity since the dot-com boom of the turn of the century"-Jason explained why.

Recreational marijuana will be legal in Canada starting mid-October. This is in fulfillment of a campaign promise by Justin Trudeau. Medical use of marijuana has been legal in Canada since 2001.

In the US, 30 states and the District of Columbia having legalized the use of cannabis for medicinal or recreational use, but it remains illegal at the federal level.

We discussed whether Canada's move could be a game changer for the industry.

A number of beverage and alcohol companies are investing in marijuana. Recently Constellation Brands STZ invested $4 billion in Canopy Growth CGC , raising its stake to 38%.

Last year, Constellation had taken a 10% stake in Canopy. They plan to produce cannabis-infused drinks and other products and sell in Canada starting next year.

We discussed whether this trend could continue as alcohol consumption is stagnant/going down while cannabis consumption has been rising and becoming mainstream. Could big tobacco companies also make such moves?

Marijuana stocks are known for their volatility since these are mainly younger, risker companies. Should investors focus on the longer-term growth prospects and ignore shorter-term noise?

ETFMG Alternative Harvest ETF (MJ) currently holds 36 companies that are involved in legal cultivation, production, marketing or distribution of cannabis or related products.

MJ was the best-performing US ETF in August. It has gathered $580 million in assets, making it one of the fastest growing ETFs this year. Jason explained how companies are selected and weighted in index. We also talked about some of the top holdings.

Canopy Growth CGC , the first publicly traded, federally regulated cannabis company in North America, started trading on the NYSE in May. It is up about 62% since then. It trades in Canada under the ticker WEED.

Tilray TLRY IPOed on the Nasdaq at $17 per share in July, and is up about 600% since then. It recently entered into a supply deal to ship its medical marijuana to Germany. It is the first cannabis company to go public on a major US exchange.

Cronos Group CRON was the target of short seller Andrew Left recently. It hasn't done as well as many other pot stocks.

We also discussed regulatory risks associated with investing in these stocks. Last week, there were concerns about a possible ban on flavored e-cigarettes which could impact vaping too.There were also reports that Canadians working or investing in the marijuana industry could face ban on travel to the US.

Please visit etfmj.com if you want to learn more about this ETF. Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com .

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Constellation Brands Inc (STZ): Free Stock Analysis Report

Coca-Cola Company (The) (KO): Free Stock Analysis Report

Tilray, Inc. (TLRY): Free Stock Analysis Report

Canopy Growth Corporation (CGC): Free Stock Analysis Report

Cronos Group Inc. (CRON): Free Stock Analysis Report

ETFMG-ALT HRVST (MJ): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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