Tag: AdvisorShares Pure Cannabis ETF (YOLO)

Now Could Be the Best Time To Buy Marijuana ETFs

Posted on by Matt Thalman

After a few years of marijuana stocks being high-flyers, largely due to investors rushing in for fear of missing out on the next big industry, the marijuana industry has not been kind to those early investors in recent years. However, that all may be changing very soon.

With a few more States recently voting to legalize the drug and the U.S. House of Representatives scheduled to vote on the decriminalization of marijuana, it truly now appears that it is just a matter of time until the drug is legally sold throughout the United States.

Furthermore, the Mexican government appears to also be on the verge of legalizing the drug as well. If Mexico does legalize marijuana, it could become the largest cannabis market in the world. And since Mexico's climate is ideal for growing marijuana, it could become a powerhouse in terms of a worldwide supplier, or at a minimum, the top North American supplier. However, none of the major Canadian marijuana companies have a foothold in Mexico yet, which could cause delays in how long investors need to wait to see any meaningful gains from their investments in the industry today.

Regardless, though with more U.S. States legalizing it and decriminalization votes set to take place in the U.S. legislature, and Mexico appearing to be on the verge of legalizing the drug, now would seem like a good time to get on the train. It's usually better to be early than it is to be late.

So, if you are ready to buy into the industry, or even if you want to wait, let me give you a few options you can look at Continue reading "Now Could Be the Best Time To Buy Marijuana ETFs" →

An Industry That Could Be A "Savior"

Posted on by Matt Thalman

A few years ago, the investing world was enthralled with the idea that the marijuana industry was going to be the ‘next big investing trend.’ Unfortunately, for most who bought into the hype, the investments in the industry have not lived up to their promises. However, that may soon be changing.

The big marijuana players and their investors have all suffered over the years for several reasons. First, the industry is simply too fragmented for a single or handful of players to dominate the landscape. This is an issue because while competition is good, too much competition doesn’t allow individual companies in the industry to experience the power of ‘scale.’

What that means is, let’s say a marijuana company opens a farm. The farm may be large enough to produce 100 pounds, which is enough to cover the costs of the farm and the farmer. However, that 100 pounds aren’t enough to cover the cost of the transportation of the product from the farm, the distribution center, the security for the farm and distribution center, or the research and development so that the farmer can become more efficient and offer different strains. The fragmentation of the industry also hurts pricing power. The more competition means people trying to push product, perhaps simply to cover costs, means prices hit near rock bottom.

Another reason the industry has suffered is the very slow progress of legalizing marijuana both in most US States and the vast majority of countries around the world. With only a handful of states in the US having legalized the plant and the Federal Government still considering it a controlled substance, adoption rates around the country have been sluggish. When the industry was expecting to grow due to increasing numbers of legalized States rapidly, investors were pouring money into them. However, that money has begun drying up, which is now causing problems on balance sheets and debt levels. Continue reading "An Industry That Could Be A "Savior"" →

Will 2020 Be Different For Marijuana ETFs

Posted on by Matt Thalman

At the start of 2019, the marijuana industry was the 'new' hot investment. By the end of the year, no one was bragging about owning shares in the industry. Why did this happen, and is 2020 going to be more of the same, or should you consider buying into the up and coming industry now?

The marijuana industry still showed signs of becoming the next great thing early in 2019. The industry that was going to take the crown away from technology as the 'fastest-growing' sector in the market. In 2019 the 'pumping' of marijuana stocks ended. But that all came to an abrupt halt around July.

At that time, investors stopped believing the narrative that had been pushed for about 3 years prior. Legalized marijuana in a few States and Canada would help pave the way for global legalization and massive profits for all the companies involved. And don't forget about the new 'marijuana-infused beverage category, which spurred investments in all the big marijuana companies by all the big alcohol beverage companies.

No one wanted to miss out on the 'next big thing,' investors and multinational organizations.

Then reality struck when earnings report after earnings report indicated the industry was not profitable and way to segmented. Furthermore, the earnings reports indicated that while most investors and businesses in the marijuana industry wanted more States and countries around the world to legalize the use of marijuana, that the companies operating in the industry couldn't handle their current demand, let alone anything additional. Shortages in Canada plagued the industry in 2019 and highlighted the biggest problem wasn't opening new markets; it was how they would supply them.

Building new grow houses may sound simple. However, the red tape and political maneuvering typically haven't been easy. Also, in most areas that growing marijuana on a large scale is Continue reading "Will 2020 Be Different For Marijuana ETFs" →

The Second Marijuana ETF Is Now Open For Business

Posted on by Matt Thalman

The AdvisorShares Pure Cannabis ETF (YOLO), the second pure play Marijuana Exchange Traded Fund began trading on Thursday, April 18th, (it would have been fun if the market had been open on April 20th). The fund is a direct competitor to the ETFMG Alternative Harvest ETF (MJ), the only other US traded marijuana ETF.

(It should be noted that the AdvisorShares Vice ETF (ACT) also is heavily invested in marijuana and cannabis stocks, but it also has a large percentage of its portfolio in tobacco and alcohol-related business, which have no connection to the marijuana industry).

The two funds will be direct competitors, but not because they are investing in the same companies due to the differences in each fund’s principal investing strategy based on their ‘Fund Prospectus,’ but solely because they are the only two ETF’s primarily focusing on cannabis-related businesses.

YOLO’s fund prospectus states the following; Continue reading "The Second Marijuana ETF Is Now Open For Business" →