Marijuana is becoming increasingly accessible for medical use. More and more companies are getting involved in this potentially risky industry: the market is growing, and with growth comes investor interest. It was only a matter of time before an ETF attached to the industry emerged, though it's not a US-based fund, but a Canadian one.
In April the Horizons Medical Marijuana Life Sciences ETF debuted on the Toronto Exchange (TMX: HMMJ), the first to cover the biotech and medical marijuana production industries. Despite growing interest in this industry, we can anticipate a certain level of controversy. There are investors for whom the stigma of being associated to the drug is too risky politically, or for religious reasons. U.S. President Donald Trump, for one, has declared that he would like to strengthen anti-drug laws pertaining to marijuana. That might be a lot of pressure for an industry that is still developing, and is made up of companies too small to debut on a New York Exchange.
The Horizons Medical Marijuana Life Sciences ETF is on the North American Medical Marijuana Index. There's a .75% management fee alongside any trading costs. The fund is in Canadian dollars and its debut price was $10 CAD. Its net assets at the time of debut were $110 billion CAD. 14 companies make up the ETF, four of which as U.S. based. The rest are Canadian.
The U.S. companies listed in HMMJ include Scotts Miracle-Gro
It is possible that the biggest limitation for HMMJ will be its listing in Canada instead of the U.S, which may lead to less potential investors. Of course, this is just the beginning of legal profitability for this growing industry. We all know that with risk comes greater reward. Medical marijuana use has grown dramatically over the last several years, and there's no telling what its market potential might be.
