Those wishing to invest in the cannabis-related stocks will be given easier access to profit from a quickly growing opportunity.
A new exchange traded fund (ETF) has gained approval to join the New York Stock Exchange (NYSE). Starting December 26, investors can purchase from the Alternative Agroscience ETF through a NYSE subsidiary.
The ETF, which only tracks companies in states where cannabis is legal, follows the Alternative Agroscience Index. It includes companies involved in the manufacture of cannabinoid-related drugs, pharmaceuticals and fertilizers. The benefit for an ETF is that investors can buy into the fund and diversify their holdings and support the expanding cannabis business market.
The cannabis industry has been predicted to exceed $20 billion by 2020. It is also expected to make a quarter of a million job opportunities through farming, cannabis sales and manufacturing products. Legal weed sales jumped 30 percent last year.
Investments for cannabis companies are crucial. Since the product is still federally prohibited, they can’t claim business expenses or take out loans from banks. Currently, 29 states have legalized medical cannabis and eight more have legalized cannabis for recreational consumption.
With more states like the agriculturally-blessed California legalizing cannabis, investors are jumping for chance to ride the rapid growth. Legalization brings a boom of business and tourism, as was the case with Colorado, which has generated hundreds of millions in revenue.
The Alternative Agroscience ETF joins The North American Marijuana Index and its two sub-indexes which focus on the US and Canada. It began in 2015 to fund and track the leading cannabis companies. In the last month, the current 35 components increased 54 percent.
In Canada, the Horizons Marijuana Life Sciences ETF debuted earlier this year with 14 stocks and has risen almost 20 percent. It was the world’s first cannabis-themed ETF. The country is poised to become the second to legalize cannabis, behind Uruguay, this year. With that will come an explosion of cannabis-related business.