The first marijuana ETF is expected to trade on April 5, 2017, on the Toronto Stock Exchange (TSE), in what is the biggest news for the marijuana industry this week.
It's called Horizons Medical Marijuana Life Sciences ETF, and it will trade under the symbol HMMJ. The Horizon ETF will hold North American-listed companies involved with medical marijuana production and bioengineering.
This is a story that we've been following closely for Money Morning members.
Through our free Profit Alerts system, we shared an update about ETF Managers Trust, which filed paperwork on Feb. 16 to try and be the first marijuana ETF on the market. Its Emerging AgroSphere ETF planned to invest in marijuana companies that produce or sell products from hemp.
But there haven't been any updates on the filing process of when the Emerging AgroSphere ETF will enter the markets.
However, the Horizons Medical Marijuana Life Sciences ETF debuting on April 5 is great news for risk-averse investors.
The Benefits of Investing in the First Marijuana ETF
Pot stocks are speculative investments because marijuana is still illegal under federal law in the United States.
And when the Trump administration comments on the cannabis industry, marijuana stock prices can become volatile. For example, White House Press Secretary Sean Spicer suggested on Feb. 24 the federal government would enforce federal law in states where recreational marijuana had been legalized.
Investors panicked, and pot stock prices plummeted. The MassRoots Inc. (OTCMKTS: MSRT) stock price opened at $0.98 per share on Feb. 24 and fell to an intraday low of $0.80 per share (a loss of 18.36%).
Canopy Growth Corp. (OTCMKTS: TWMJF) opened at $9.16 per share and fell to an intraday low of $8.50 per share (a loss of 7.2%).
But a marijuana ETF can limit losses, maximize upside, and offer a safer way to play the $6.7 billion North American cannabis market.
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A marijuana ETF helps protect investors through diversification. The HMMJ ETF will reportedly hold 11 Canadian marijuana companies and four U.S. marijuana companies. Holding several companies in an ETF can offset losses from single stocks.
For example, the GW Pharmaceuticals Plc. (Nasdaq ADR: GWPH) stock price actually climbed 0.6% on the day of Spicer's announcement.
Auora Cannabis Inc. (OTCMKTS: ACBFF) climbed 2.05%.
So even when a single marijuana stock falls, other stocks in the holding may be able to offset the losses.
The second reason why this specific ETF offers a safer way to invest in marijuana stocks is it will only hold medical marijuana bioengineering and production stocks. While the Trump administration may crack down on legal marijuana, it appears medical marijuana legalization will be left to the states.
And even if marijuana enforcement becomes a priority for U.S. Attorney General Jeff Sessions, 11 of the stocks held in Horizons Medical Marijuana Life Sciences ETF are Canadian companies.
That means the majority of the holdings in the ETF won't be affected by policies in America, and the Canadian marijuana companies should see a boom with full legalization.
Canadian Prime Minister Justin Trudeau is expected to announce on April 10 that marijuana will be legal for all Canadians over the age of 18 by July 1, 2018.
But before rushing out and adding HMMJ to your portfolio, you need to talk to your broker. Horizons Medical Marijuana Life Sciences ETF will trade on the Toronto Stock Exchange, and some brokerages won't let you trade on foreign exchanges.
However, Money Morning Director of Technology & Venture Capital Research Michael A. Robinson has created the "bible of weed investing." This is helping investors plot their course to a 7-figure weed windfall with the top pot stocks from every ecosystem - growers, edibles, dispensaries, and more.
Here's everything you need to know...
Who Is Marijuana Stock Guru Michael Robinson?
Michael is one of our most prominent and respected investing "gurus" here at Money Map Press - and for good reason. He is one of the top financial analysts working today. Make no mistake: Michael's ideas are completely his own. He's a true original. He works solely for Money Map Press... and receives absolutely no compensation from companies he writes about.
His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style.
Michael's 30-year track record as a leading tech analyst has garnered him rave reviews, too.
As editor of the financial newsletter American Wealth Underground, Michael amassed an amazing track record using rigorous investing. The first analyst to uncover the rare earth mineral crisis, he amassed cumulative gains of 990% for his readers in just 16 months.
It's no wonder that prestigious publications vie for his analysis. He's written for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
His research is world class, too. The Oakland Tribune, Detroit News, The San Francisco Examiner, The Kansas City Times, Wealth Magazine, and American Banker all publish his reporting. He has appeared on Larry King's syndicated radio show.
Robinson has an honors economics degree from the University of Missouri at Columbia with a minor in journalism.
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