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Medical Cannabis ETF Monthly Report | May

  • The market staged a strong recovery in April with cannabis companies on the upswing
  • New Zealand is next on the list to table legalisation of adult-use cannabis
  • Soaring demand for cannabidiol (CBD) products in the UK since the pandemic began

 

Medical Cannabis ETF Monthly Performance


April
The Medical Cannabis and Wellness Equity Index (NTR)

16.50%

Current performance is no guarantee of future performance.
Source: Bloomberg/HANetf

 

Medical Cannabis ETF Performance Review

After steep, broad market drawdowns in March, the market staged a strong recovery in April with cannabis companies on the upswing. The medical cannabis industry continues to face valuation headwinds along with the broader economy but there are green shoots as it relates to the resilience and innovation of businesses to make the best of a bad situation. The Medical Cannabis & Wellness UCITS ETF (CBDX) was up in excess of 16% in April as the secular growth continued to experience increased patient adoption and overcome regulatory hurdles.

Across our three main investment verticals, business activity has been little affected through the crisis. Medical cannabis companies continue to manufacture products and deliver to their patients achieving the status of ‘essential’ businesses. CBD wellness, although fragmented is primarily an online distribution model and continues to serve users. Although there has been hiccups in the supply chain, product sales have shown increases as customers deal with an increase in anxiety and sleep issues as they are locked up at home. Ancillary businesses also continue to increase sales as growth infrastructure requirements for aforementioned essential businesses remain on track.

 

Sub-sector Average Return Weighted Return
Medical 17.4% 15.26%
CBD 25.0% 16.14%
Ancillary 27.7% 18.91%
    16.43%
Past performance is no guarantee of future performance. 
Source: Bloomberg. Data as of 08/05/20

 

 

Medical Cannabis and Wellness Equity Index (NTR) Performance

Total Return NAV to Date (up to 31/03/2020)

1M 3M 6M YTD 12M Since Inception
The Medical Cannabis and Wellness UCITS ETF (Acc)

16.43%

-15.75%

NA

-12.55%

NA

-12.55%

Medical Cannabis and Wellness Equity Index (NTR)

16.50%

-16.19%

-22.73%

-12.98%

-42.66%

-12.98%

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 30/04/20

 

Industry News

New Zealand is next on the list to table legalisation of adult-use cannabis in a September 2020 referendum. The legislation presented is comprehensive with details of regulation on products, market participants, and supply chains. Like Canada, the legislations attempts to introduce adult use cannabis in plant form to start and eventually grow to manufactured products. The country stands to generate $490M in tax revenue from legal cannabis sales as illicit sales are replaced by the regulated market.

Report data suggests soaring demand for cannabidiol (CBD) products in the UK since the pandemic began, according to Alphagreen.io. The report suggest that more than 8 million Brits are now buying CBD products, with spending exceeding GBP150M in the first four months of 2020 alone. A recent sharp spike in demand for CBD products was recorded as Britons seek help with anxiety and trouble sleeping. Study participants also indicate a move towards alternative natural therapies.

 

Outlook

As per our earlier writings, the silver lining emerging from the Covid19 crisis is the validation of medical cannabis and CBD wellness as vital industries promoting the health and welfare of patients. There are multiple stories around the noise of adultuse cannabis failing to live up to expectations and this will continue to be highlighted by news media. It is important to distinguish the facts from the noise and recognise a secular growth story for what it is.

 

Constituent News

Innovative Industrial Properties (NASDAQ: IIPR) continued on its mass expansion according to a business update for the first quarter of 2020 showed. Year to date, IIPR has acquired nine properties in the US, spending in excess of $200M USD. The company has become the primary lender to the US medical cannabis industry, helping finance the development of critical infrastructure to keep up with growing demand. The strength of this industry shows underneath the headline numbers though. Where many US focused REITs have had historically high delinquencies on rental income, IIPR disclosed working closely with three of its 21 tenants to provide temporary rent deferrals which amount to 3% of IIPR’s annual revenues. A number which pales in contrast to other industrial REITs where tenants have been forced shut due to the pandemic, whereas cannabis cultivation remains open, deemed an essential service.GW Pharma continues to trailblaze in the world of big pharma 

GW Pharma’s (NASDAQ: GWPH) blockbuster epilepsy treatment, Epidiolex has been de-scheduled by the US Drug Enforcement Agency (DEA) as expected. This means the drug can be sold in pharmacies in the US without federal controlled-substance restrictions, greatly increasing access for patients. In addition to prolific adoption rates for Epidiolex, on a recent earnings call, management alluded to a survey of health care practitioners, 60% of whom reported using Epidiolex for other refractory epilepsies with the intent to grow use in other segments. This indicates the increased comfort of practitioners to prescribe the drug and multiple additional use cases.

 

Top 10 Constituents  Weight
Corbus Pharmaceuticals Holdiongs Inc. 14.20%
Scotts Miracle-Gro Co/The 12.16%
Cara Therapeutics Inc 10.25%
GW Pharmaceuticals - ADR

10.17%

Innovative Industrial Properties Inc 8.94%
Amyris Inc 7.73%
Charlotte's Web Holdings Inc 7.69%
Growgeneration Corp 5.12%
22nd Century Group Inc 5.00%
Zynerba Pharmaceuticals Inc 3.59%
Region Breakdown Weight
US 86.76%
CA 13.24%

Source: Bloomberg / HANetf. Data as of 30/04/20

 


Fund Details

The Medical Cannabis and Wellness UCITS ETF, is a UCITS compliant Exchange Traded Fund domiciled in Ireland.

The fund tracks a rules-based Medical Cannabis and Wellness Equity Index from Solactive, consisting of publicly listed companies conducting legal business activities across nine thematic sub-sectors in the medical cannabis, hemp and CBD industries.

The fund seeks to provide targeted exposure to the rapidly expanding legal medical cannabis industry that is set for further growth as more countries legalise cannabis for medical use.

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance.


Exchange BB Code RIC ISIN Currency Income
London Stock Exchange CBDX LN CBDX.L

IE00BG5J1M21

USD Acc
London Stock Exchange CBDP LN CBDP.L IE00BG5J1M21 GBP Acc
Xetra CBSX GY CBSX.DE DE000A2PPQ08 EUR Acc

 

Click here to download: Monthly Cannabis Market Report 

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