The Stealth Marijuana Play In Your ETF

January 30, 2018

Fig. 3: Top 10 Holdings for BIBL

Source: FactSet


While AbbVie isn't a maker of cannabinoids, it does manufacture dronabinol, a synthetic form of THC, which is the psychoactive substance in marijuana—which is likely the reason AbbVie is also the top holding in ACT.

Let me say that again for those in the back: The "bible" ETF and the "vice" ETF both have the same top holding, AbbVie.

Other notable ETFs with marijuana exposure include the Republican Policies Fund (GOP), at 3.21%; the social media-guided BUZZ US Sentiment Leaders ETF (BUZ) at 3.08%; and the Point Bridge GOP Stock Tracker ETF (MAGA) at 0.74%.

Promise & Potential

There are two ways to interpret this data.

The first is that hundreds of ETFs have an undisclosed risk buried in their portfolios, one that could expose investors to greater volatility and high premiums/discounts, should these ETFs need to dump their holdings in a hurry.

That could happen, I suppose, should the Fed revoke DEA certifications and crack down on medical marijuana research; but the idea of it feels very “Chicken Little” to me.

The second conclusion—and the point I made for Bob Dylan—is that the U.S. is undergoing a massive cultural shift in the way we think about marijuana. No longer are we terrified that marijuana will lead our babies astray. Instead, we're gripped by a whole new reefer madness—the rush to capitalize on and profit from all the potential marijuana has to offer.

When one in six ETFs in the U.S. has at least some exposure to marijuana, the writing's on the wall—or, maybe, blowing in the wind.

As of publication, the author held no positions in any of the securities listed. Contact Lara Crigger at [email protected]

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