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Medical Cannabis Monthly Report | January

  •  As the state of Georgia broke the deadlock between the US Houses of Congress, a clear path from the Democrats to implement their agenda has been made.        
  • The cannabis industry eagerly awaits the decision on the passing of the MORE and SAFE Act.

 

Performance Review:

After a strong breakout in November, cannabis stocks consolidated their strength in December as investors priced in an improved outlook under a Democratic House and Presidency. This momentum has continued through January with a surprise Senate takeover by the Democrats which greatly improves the odds of cannabis reform in the US. Going forward, we see significant tail winds carrying the industry through 2021. Momentum in the US is at full swing for legislative reform both at federal and state levels. In the UK, incumbents are racing to be the first to list on the LSE and international supply chains are gaining strength to supply the growing European market.

Within the CBDX universe, the performance along the medical cannabis and ancillary services sectors remained very strong. Medical cannabis names performed very well on the back of strengthening supply chains and increased distribution. Ancillary names on the other hand have been directly connected to US cannabis momentum. Investors unable to invest directly in plant-touching companies are taking the indirect route; in the process taking valuations higher for these non-plant touching companies. The only sub-sector in the red was CBD Wellness where investors took profits, capturing the strong performance of the previous month.

Source of all data: Bloomberg.

 

Medical Cannabis Index Monthly Performance



December

The Medical Cannabis and Wellness Equity Index (NTR)

9.74 %

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

 

Sub-sector

December Performance

Medical Cannabis

33.3%

Ancillary Services

28.2%

Pharmaceutical Cannabinoids

16.4%

CBD Wellness

-3.1%

CBDX

9.65%

Past performance is no guarantee of future performance. Source: Bloomberg. Data as of 31/12/2020  

 

Medical Cannabis and Wellness Equity Index (NTR) Performance and CBDX Medical Cannabis ETF  

Total Return NAV to Date (up to 30/12/2020)

 

 

1M

 

3M

 

6M

 

YTD

 

12M

 

Since Inception

 

The Medical Cannabis and Wellness UCITS ETF (Acc)

9.65%

39.12%

41.28%

41.97%

-

41.97%

Medical Cannabis and Wellness Equity Index (NTR)

9.74%

39.47%

41.71%

40.41%

40.41%

41.71%

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 31/12/2020

 

Industry News

In early January, the state of Georgia broke the deadlock between the US Houses of Congress resulting in a cleared path for the Democrats to go about implementing their agenda. This bodes well for cannabis reform as the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act passed in the lower House as recently as December 4th. Although legalization will have hurdles, there are multiple other bills drafted which will accelerate growth for the sector. Next, it is important to keep an eye on the SAFE Act, which will allow cannabis businesses to operate with the same access to capital and financial services as other industries.

 

Constituent News and November Rebalance

The top performer of our cannabis ETF GrowGeneration (NASDAQ:GRWG) continued executing on its roll-up strategy in an effort to create the largest hydroponics provider to cannabis operators in the US. Raising US$125m via a secondary offering in December,[1] the company completed three separate acquisitions in December to grow its distribution footprint. The stock has been an outstanding investment for CBDX in 2020 with total returns of 880%.

 

Innovative Industrial Properties (NYSE:IIPR)

has been directly involved in the success of many US cannabis operators, providing off-balance sheet financing via sale-leaseback of property. The REIT has been able to deploy capital across the US with cap rates between 12-15%, well above the industry average. With closing of multiple properties in December, the company has expanded its portfolio to 66 properties comprising 5.4M square feet over 17 states.[2] The stock has returned 151% in 2020 as investors pile into the non-plant touching sectors of US cannabis.

 

Top 10 Constituents

Weight

Innovative Industrial Properties

16.68

Scotts Miracle-Gro Co/The

14.03

GrowGeneration Corp

13.81

GW Pharmaceuticals PLC

13.56

Arena Pharmaceuticals Inc

9.48

Amyris Inc

9.11

Turning Point Brands Inc

6.16

Cara Therapeutics Inc

5.11

22nd Century Group Inc

2.20

Charlottes Web Holdings Inc

2.13

 

Region Breakdown

Weight

United States

84.29%

Great Britain

13.56%

Canada

2.15%

Source: Bloomberg / HANetf. Data as of 31/12/2020

 

 

Outlook

The US cannabis trade is now running full steam ahead. With a ‘blue wave’ there is significant upside for the CBD wellness and ancillary services industries in the US, which are sharing the growth rates of the underlying cannabis industry. There is significant momentum not only at the federal level with multiple cannabis bills expected to be tabled soon but also at the state level as pandemic hit government coffers look towards taxation revenues for some relief. States such as New York, Virginia, and even Texas are debating now debating the advantages of cannabis legalization and its impact on job creation, social inequality, and most importantly tax revenues.

In the UK, within the first half we expect to see multiple cannabis operators to become listed on the London Stock Exchange. Patient count is rising at a consistent pace and officials expect up to 15,000 patients to be registered with Project 2021 by the end of the year. The largest data collection exercise in the world should start yielding results which will make both physicians and patients more comfortable with cannabis as a mainstream rather than fringe treatment.

Our cannabis ETF has had a great run in 2020 with returns in excess of 40%. This upside has mostly been captured through the proliferation of cannabis in the United States. We expect this trend to be even stronger in 2021 as further reform in the US will provide regulatory precedence for many countries around the world. There is still significant addressable market yet to come online and CBDX is a worry-free way to access this secular growth.

 

Medical Cannabis ETF Details

The Medical Cannabis and Wellness UCITS ETF, is a UCITS compliant Medical Cannabis ETF 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

IEE00B5J1M21

EUR

Acc

SIX

CBDX SW

CBDX.S

IE00BG5J1M21

CHF

Acc

 

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