Best Marijuana ETFs for Q3 2021
Marijuana exchange-traded funds (ETFs) provide investors with exposure to equities of companies that engage in the cultivation, distribution, and sale of marijuana and related products. Products of marijuana companies include dried flowers, oils, seeds, edibles, and more. Still prohibited as an illegal substance in many parts of the world, marijuana is gaining wider acceptance for both medicinal and recreational purposes. Support for continued legalization is growing, and cannabis is now a multi-billion-dollar industry. Marijuana ETFs are a straightforward way for investors to gain exposure to a diversified basket of marijuana equities and profit from this growing industry.
- Marijuana equities have significantly outperformed the broader U.S. equity market over the past year.
- The ETFs with the best 1-year trailing total return are CNBS, YOLO, and THCX.
- The top holdings of these ETFs are class A shares of Silver Spike Acquisition Corp., Village Farms International Inc., and Tilray, Inc., respectively.
There are 6 marijuana ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). The marijuana sector, as measured by The Marijuana Index (North America), has dramatically outperformed the broader market with a total return of 165.2% over the past 12 months compared to the S&P 500’s total return of 50.0%, as of May 6, 2021. The Marijuana Index is an equal-weighted index, which means that it may significantly overweight small-cap equities relative to a cap-weighted index like the S&P 500. The best-performing marijuana ETF, based on performance over the past year, is the Amplify Seymour Cannabis ETF (CNBS). We examine the 3 best marijuana ETFs below. All numbers below are as of May 14, 2021.
On March 31, 2021, New York passed a law legalizing recreational cannabis, expanding medical use, and decriminalizing possession of small amounts of marijuana, among other measures. Not all of these provisions will go into effect immediately and there is not yet a timeline by which all these measures will be fully implemented.
- Performance over 1-Year: 150.9%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.43%
- 3-Month Average Daily Volume: 202,376
- Assets Under Management: $135.9 million
- Inception Date: July 23, 2019
- Issuer: Amplify Investments
CNBS is an actively managed ETF that provides exposure to the cannabis industry by investing at least 80% of its assets in securities of companies that generate 50% or more of their revenue from the cannabis and hemp ecosystem. The majority of the fund’s holdings operate within either the cultivation and retail or agricultural technology sectors of the cannabis market. But investing and finance companies also garner a sizeable representation. Most of its holdings are based in either the U.S. or Canada, but a portion of the portfolio is based in the U.K. and a small fraction in Israel. It follows a blended strategy investing in a mix of growth and value stocks of mostly mid- and small-cap companies. The fund’s top three holdings include class A shares of Silver Spike Acquisition Corp. (SSPK), a special purpose acquisition company (SPAC) that intends to acquire one or more cannabis companies; AFC Gamma Inc. (AFCG), a provider of financial services to the cannabis industry; and Tilray Inc. (TLRY), a Canada-based provider of medical cannabis.
- Performance over 1-Year: 129.5%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 1.13%
- 3-Month Average Daily Volume: 407,773
- Assets Under Management: $351.4 million
- Inception Date: April 17, 2019
- Issuer: AdvisorShares
YOLO is an actively managed ETF that seeks long-term capital appreciation by investing in both domestic and foreign cannabis equities. The fund is heavily weighted to mid-cap equities primarily in the U.S. and Canada. But like CNBS, it also provides exposure to companies based in the U.K. and a small fraction in Israel. Its holdings span multiple areas of the cannabis market, including agriculture, biotechnology, pharmaceutical, and more. YOLO is designed to take advantage of growth in the cannabis industry over the long-term and may be ideal for a buy-and-hold portfolio. The fund’s top three holdings include Village Farms International Inc. (VFF), a Canada-based grower of tomatoes, bell peppers, cucumbers, and cannabis; Innovative Industrial Properties Inc. (IIPR), a real estate investment trust (REIT) focused on the cannabis industry; and Canopy Growth Corp. (CGC), a Canada-based medical marijuana producer.
- Performance over 1-Year: 98.0%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 2.84%
- 3-Month Average Daily Volume: 226,554
- Assets Under Management: $149.2 million
- Inception Date: July 9, 2019
- Issuer: Mcivy Co. LLC
THCX tracks the Innovation Labs Cannabis Index, which consists of global companies engaged in the legal cannabis, hemp, or CBD-based pharmaceutical, consumer product, and wellness markets. The ETF was designed to provide a convenient way for investors to gain exposure to a basket of stocks expected to benefit from growth in the hemp and legal marijuana industries. The majority of the fund’s holdings are based in the U.S. and Canada, but a small portion is also based in the U.K. It is heavily weighted to the pharmaceuticals and biotech sector, and follows a blended strategy of investing in a mix of value and growth stocks. The fund’s top three holdings include Tilray; Fire & Flower Holdings Corp. (FAF:TSE), a Canada-based supplier of cannabis products; and GrowGeneration Corp. (GRWG), a farm supply company that owns and operates retail hydroponic and organic specialty gardening retail outlets.
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