ETFMG Launches Active US Marijuana ETF

May 14, 2021

Yesterday, ETF Managers Group followed up its $1.6 billion ETFMG Alternative Harvest ETF (MJ) with the launch of a similar fund focused exclusively on U.S. securities. The actively managed ETFMG U.S. Alternative Harvest ETF (MJUS) covers companies involved in marijuana-related business activities in the United States.

MJUS comes with an expense ratio of 0.75% and lists on the NYSE Arca.

A cannabis fund focused on the U.S. market may be especially interesting to investors due to the push to legalize, or at least decriminalize, the drug domestically. A press release from ETFMG estimates that legal marijuana sales in the U.S. could more than quadruple to $85 billion by 2030.

The fund considers a wide swath of companies, targeting those that derive at least half their revenue from marijuana-related businesses ranging from production to support services.

It can use total return swaps to get exposure to securities it cannot purchase due to legal or administrative reasons, and it is able to invest in multistate operators, according to the prospectus, which also notes that the fund will allocate at least a quarter of its portfolio to companies falling within the pharmaceuticals, biotechnology and life sciences industries.

Although there are several ETFs targeting the global marijuana market, the most direct competitor to MJUS is the $1 billion AdvisorShares Pure US Cannabis ETF (MSOS), which has a similar focus on the cannabis and hemp industry in the U.S. and on multistate operators. MSOS comes with an expense ratio of 0.74%, just 1 basis point less than MJUS.

Contact Heather Bell at [email protected]

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