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The key to understanding the true potential of any market is demand.
And with the launch of a new cannabis ETF, the demand for cannabis stocks is spreading across the globe.
Set up by Canadian investment asset manager Purpose Investments in partnership with Deutsche Boerse, the Medical Cannabis and Wellness UCITS ETF is the first cannabis exchange-traded fund to be listed on the London Stock Exchange (LSE).
"Cannabis is a market that's huge, and it's not going away… There's a lot of money in the sector that hasn't yet been brought into the public marketplace… bringing an investment vehicle into the space shows that there are a lot of opportunities here that investors will want to add to their portfolio," Purpose's chief investment officer, Greg Taylor, said in a statement.
Demand for buying cannabis is well established, with an estimated $344 billion in sales across the globe in 2018.
All of those sales just need to find their way into legal markets.
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And when you pair increased sales with global investing demand, that's really going to move the needle for cannabis stock prices…
Triggering a $1 Trillion Market for Cannabis Investing
The power of legalization is stopping black market sales and allowing regulated companies to generate revenue from selling safe products.
Just in North America, there was an estimated $70 billion in cannabis sales in 2018. Only around $10.8 billion of that was legal.
Now, with 19 states potentially passing some form of cannabis legalization in 2020, the writing on the wall is clear.
Full cannabis legalization is a question of "when," not "if."
That means revenue and profitability, and that's why there is a demand from European investors to buy North American cannabis stocks right now.
They don't want to sit on the sidelines and get left behind.
According to its "Factsheet" data, as of Dec. 31, 2019, cannabis companies in the United States consist of 79.39% of the Medical Cannabis and Wellness ETF holdings while cannabis companies in Canada consist of 20.61%.
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