- Medical cannabis companies continue to show outsize growth and are
now becoming profitable
- Medical reform in
the US will likely set the stage for broader reform in Europe
- We continue to see an increase in the number of institutional
investors getting involved in the medical cannabis space
Performance Review:
Momentum from
July continued into August, with strong performance for our cannabis ETF and underlying
verticals. Investors looking for a growth story outside of large-cap tech are
starting to recognise the potential of medical cannabis and its affiliated
industries.
Medical cannabis
companies continue to show outsize growth and are now becoming profitable to
the intrigue of traditional long-only investors who have been awaiting to see
the sustainability of this outsize growth. With momentum of medical cannabis
decriminalization in the US building, we continue to see an increase in the
number of institutional investors getting involved in the space which has
helped price multiples increase in the space causing for strong returns.
Medical Cannabis Index Monthly Performance
|
August |
The Medical Cannabis and Wellness Equity Index (NTR) |
7.32% |
Current performance is no guarantee of future performance. Source: Bloomberg/ HANetf
Sub-sector |
Average Return (August) |
Ancillary Services |
12.3% |
Pharmaceutical Cannabinoids |
6.0% |
Medical Cannabis |
3.9% |
CBDX Wellness |
-17.6% |
CBDX |
7.3% |
Past performance is no guarantee of future performance.
Source:
Bloomberg. Data as of 31/08/2020
Medical Cannabis and Wellness
Equity Index (NTR) Performance and
CBDX Medical Cannabis ETF
Total Return NAV to Date (up to 31/08/2020)
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 31/08/2020
Industry News
Patients using cannabis for medical use
continues to increase globally, outside of the much spoken about Canadian and
US markets. Latest data showed that patient counts in Australia are reaching
the fastest growth rate recorded. Just in the month of July, Australia added
5500 patients to their program to bring the total close to 30,000 patients. It
is estimated the potential market size of Australian medical cannabis could reach
700,000 patients in coming years[1]. Israel also recently announced
that cannabis patients have reached 60,000 with most medical cannabis being
imported into the country from Portugal and Canada[2]. Momentum for
medical cannabis is running red hot beyond the well-documented markets of
Canada and the US.
Speaking of the US, cannabis momentum
continues to dominate as the US House of Representatives take to vote on the
MORE Act in September. The Act, which is sponsored in the Senate by Vice
Presidential candidate Kamala Harris, seeks to decriminalise medical cannabis
at a federal level and using the tax dollars to re-invest in minority
communities which have been adversely impacted by the half century long war on
drugs in the country. Although mostly symbolic, the flooring and vote on the
Act re-emphasises the commitment of the Democratic party towards cannabis
reform as public opinion and political climate changes towards cannabis
legalization.
On CBD Wellness, a bi-partisan bill has been
submitted in the US House of Representatives by Rep. Kurt Schrader (D-OR) and
Rep. Morgan Griffith (R-VA) as well, which will ensure that hemp-derived CBD
can be lawfully marketed as a dietary supplement in the US. This could prove to
be a big step for CBD to find shelf space across national retail chains and
un-cuff CBD producers to market and sell ingested CBD products, the widely
preferred method of usage.
Outlook
Going into fall and looking forward to the US
elections has been the focus of our cannabis research this year. With multiple
initiatives to decriminalise cannabis being tabled by the Democrat Party, we
could see quick conversion of plans to reality if the Democrats sweep the
Senate in addition to their current control of the House.
Medical reform in the US will likely set the
stage for broader reform in Europe too, and create a path for faster acceptance
of the industry in key markets of UK and Germany.
Consistent News
In our Cannabis ETF, we continue to highlight portfolio ancillary
company GrowGeneration
(GRWG)
which has caught the attention of a wider investor base with its recently
posted second quarter earnings. After the company reported same store sales
increases of 49%3 and raised guidance for revenues in 2020 and
beyond, the investing public has come to recognise the strength of the
company’s business model. The stock has quadrupled in value over the past few
months as the company continues to execute its simple but robust model in a
highly fragmented industry.
CBDX Medical Cannabis ETF -Top 10 Constituents |
Weight |
GrowGeneration Corp
|
16.66%
|
Innovative Industrial Properti
|
13.37%
|
Corbus Pharmaceuticals Holding
|
10.95%
|
Scotts Miracle-Gro Co/The
|
10.64%
|
Cara Therapeutics Inc
|
8.59%
|
Amyris Inc
|
7.74%
|
GW Pharmaceuticals PLC
|
7.45%
|
NewAge Inc
|
7.08%
|
Charlottes Web Holdings Inc
|
5.53%
|
22nd Century Group Inc
|
3.57%
|
Region Breakdown
|
Weight
|
United States
|
92.55%
|
Great Britain
|
7.45%
|
Canada
|
0.00%
|
Source: Bloomberg / HANetf. Data as of 31/08/2020
Medical Cannabis ETF Details
The
Medical Cannabis and Wellness UCITS ETF, is a UCITS compliant Medical Cannabis ETF domiciled
in Ireland.
Our Cannabis ETF 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 |
SIX |
CBDX SW |
CBDX.S |
IE00BG5J1M21 |
CHF |
Acc |
Click here to download. Medical Cannabis Monthly Report.