ETFMG currently manages the largest global marijuana ETF in the marketplace with the ETFMG Alternative Harvest ETF (MJ). Now, it's about to get some competition from..... itself!
Today, the company launches its sister fund, the ETFMG U.S. Alternative Harvest ETF (MJUS). The big differentiator, of course, is that while MJ targets cannabis companies worldwide (although most names reside in the United States, Canada and the United Kingdom), MJUS will focus solely on the U.S. market.
MJUS won't be the first U.S. only marijuana ETF available - that distinction belongs to the AdvisorShares Pure U.S. Cannabis ETF (MSOS) - but it's easy to understand why ETFMG wanted to jump on board. Outside of the increased adoption of legal cannabis and medical marijuana in the United States, there's a general belief that the U.S. is behind the curve globally in cannabis acceptance.
Markets in Canada and Europe, while still growing in their own right, are considered more mature and the U.S. market may be where a bigger share of the industry's growth comes from.
In a recent press release, ETFMG notes the same.
- With 17 states and D.C. having legalized cannabis, MJUS has the potential to grow as U.S.-based companies benefit from the legalization and ease on rules and regulations.
- As the largest cannabis market in the world, legal cannabis sales in the U.S. exceeded $17.5 billion in 2020, growth of 46% over 2019’s $12.1 billion, and is forecasted to reach $41.3 billion in 2026, a CAGR of 15%.
- More consumers entering the market in states where cannabis is legal and a number of measures in place to liberalize federal regulation (i.e. de-scheduling, decriminalizing, the SAFE Act, States Act and More Act) are all factors driving growth in the U.S.
About The Fund
MJUS will track the Prime U.S. Alternative Harvest Index, which has been created to provide investors with a reference measure that enables them to track both event-driven news and long-term trends of U.S. cannabis companies.
According to the fund's website...
"U.S. cannabis companies are classified as those that derive at least 50% of their net revenue in the United States. These companies are further defined as those that cultivate, produce, market or distribute the following: industrial hemp, products containing cannabis-derived products, prescription drugs or supplements or food products that include cannabis or cannabis-derived products, or provide products or services designed for, or used by, companies in the cannabis industry, including technology, real estate or financial services."
The fund currently has 33 holdings in all and charges 0.75% annually. The expense ratio isn't as low as some of the cheapest marijuana ETFs, but it's essentially in line with the biggest ones.
MJUS's top 10 holdings include Curaleaf, Green Thumb Industries and Trulieve Cannabis.
Noticeably absent from the fund are the big cannabis names that everyone is probably familiar with - Tilray, Cronos, Canopy Growth, Aurora Cannabis and Aphria.
I've noted in the past that my preference for investing in the cannabis space is a U.S.-focused product for the reasons listed above. Previously, MSOS was the only option and I'm happy to see MJUS join the group. Having MJ already in the fold for ETFMG should help in building up MJUS and I'd expect it will also have some success.
As with all new ETFs, beware of thin trading volumes and the potential for higher trading costs at first. Once the fund begins to grow, those concerns dissipate and I wouldn't be surprised to see MJUS get to that point relatively soon.