New marijuana ETF hits the block amid pot stocks rally

Green Thumb Industries

19/09/2023 15:47

By Bansari Mayur Kamdar
       Sept 19 (Reuters) - Subversive Capital Advisor launched
its sixth exchange-traded fund – Subversive Cannabis ETF - on
Tuesday, just as recent U.S. moves to ease curbs sparked a rally
in pot stocks.
    Shares of marijuana companies have soared since late last
month after a U.S. health agency's proposal to reclassify it as
a lower-risk substance boosted expectations of legalization at
the federal level.
    "We do not believe a Congress this politically divided will
meaningfully act on cannabis at the federal level," said 
Christian H. Cooper, the fund's portfolio manager, in a note.
    "However, we do believe a regulatory move to a Schedule III
status meaningfully changes the trajectory for this business in
the United States without Congressional action." 
    Cannabis ETFs such as the AdvisorShares Pure US Cannabis
 MSOS.N  and the smaller Roundhill Cannabis ETF  WEED.N  have
jumped more than 25% each so far this month.
    "The gains for these thematic ETFs could persist," said 
Todd Rosenbluth, head of research at VettaFi.
    "However, this is a relatively crowded segment with ETFs
from AdvisorShares, Amplify, Global X, Roundhill among others
offering products with longer records."
    Also on investors' radar is the SAFE Banking Act, crucial
legislation that would make it easier for the cannabis industry
to access banking services.
    "The market is getting hopeful again but the real catalyst
will be whether or not they get safe banking and whether or not
it is declassified," said Thomas Hayes, chairman at Great Hill
Capital.
    The Subversive Cannabis ETF  LGLZ.N  edged lower in thin
early trading.
    The actively managed fund will invest at least 80% of its
net assets in companies that are directly involved in the global
cannabis sector, Subversive Capital said in a statement.  
    Green Thumb Industries  GTII.CD , Verano Holdings  VRNO.CD 
and Curaleaf Holdings  CURA.CD  are among the top holdings of
the new ETF, as of Tuesday, according to Subversive Capital's
website. 
    The fund has a 0.75% management fee.
    
    
    

 (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by
Sharon Singleton)
 ((BansariMayur.Kamdar@thomsonreuters.com;  Follow on X:
@BansariKamdar;))