- The U.S. is on the verge of federal reform,
while London prepares for its first cannabis listing, and France gets started
on its pilot program
- Medical cannabis names experienced some pressure
as investors focused on US centric investments whereas medical cannabis names
are mostly focused towards South American and Europe
- With the Democrats in the driving seat,
legislative leaders have made clear that cannabis reform will be a priority
item for 2021
Past performance is no guarantee
of future performance.
Source: Bloomberg, HANetf
Month figures based on 31.01.20-31.01.21
Cannabis stocks continue to outperform in 2021 as the sector
evolves and strengthens in multiple international jurisdictions. The U.S. is on
the verge of federal reform, while London prepares for its first cannabis
listing, and France gets started on its pilot program. Elsewhere, Mexico has
put forward comprehensive cannabis reform and the Canadian supply chain
continues to improve. There are many layers of tailwinds bringing cannabis to
mainstream attention, and institutional investors are starting to take notice.
Within the CBDX universe, the performance along the US
federal reform theme remained the strongest. Ancillary services have soared as
investors looked towards increased signals from legislatures about forthcoming
reform. Since these businesses don’t have an overhang of federal legality, they
serve the broadest variety of investors and therefore are the best
representation of cannabis proliferation in the US. The verticals of CBD
wellness and pharmaceutical cannabinoids also performed well during the month.
Medical cannabis names experienced some pressure as investors focused on US
centric investments whereas medical cannabis names are mostly focused towards
South American and Europe.
The Medical Cannabis ETF Performance Table
As of 31.01.2021
The Medical Cannabis and Wellness UCITS ETF (Acc)
Medical Cannabis and Wellness Equity Index (NTR)
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 31/01/2021
With the Democrats in
the driving seat, legislative leaders have made clear that cannabis reform will
be a priority item for 2021. This includes significant changes to cannabis’
drug classification and the sector’s access to capital markets. The Democrats
frame this as an exercise of overturning the injustices of the ‘war on drugs’
and its impact on minority communities. However, it’s quite easy to gain
momentum for a legislative action expected to add hundreds of thousands of jobs
to a struggling job market and billions of dollars to extended federal coffers.
Mexico published rules
to regulate medical cannabis, setting up for a federally legal industry and
taking another step towards cannabis reform. The new law allows pharmaceutical
companies within the country to officially research cannabis for medicinal
purposes. Additionally, it also allows for testing of cannabis for adult-use
purposes. Pharmaceuticals have long found road-blocks to carry out
comprehensive research and this is another step in the right direction.
The French Government
continues on its steps towards a medical cannabis pilot program by finalizing
six producers to provide medical cannabis to the program. These include firms
from Australia, Israel, UK and Canada. The program is expected to start in
March for 3000 patients and will last two years.
The London Stock
Exchange (LSE) expects to list its first medical cannabis company in
mid-February. UK investors will now have direct access to medical cannabis
names for investment purposes. The LSE joins an exclusive club of senior
exchanges to list medical cannabis names such as Canada, Australia and Israel.
The capitalizations of these companies are expected to be small but are a giant
step to increase investor access to the space.
GW Pharmaceuticals (GWPH) to be acquired by Jazz
Pharmaceuticals (JAZZ) in a deal worth US$7.2B.
This follows shortly after GWPH had announced a record setting $500M+ in sales
for the calendar 2020 year.
This transaction marks the entry of mainstream pharmaceuticals validating the
pharmaceutical cannabinoid theme and we expect further interest from big pharma
into cannabinoid research.
The Ancillary Services vertical continues to grow and
outperform as investors search for cannabis related growth in a non-plant
touching manner. This has led to multiple companies making way to public
markets as their demand increases. Examples include the likes of hydroponics
wholesale HydroFarm (HYFM), developer of grow solutions Agrify (AGFY), and
marketing technology provider WeedMaps (going public through Silver Spike SPAC
Legislative leadership in the US has doubled down on their
cannabis reform promises and the ancillary service and CBD wellness sectors
have outperformed upon this expectation. There is significant momentum on the
Federal landscape for comprehensive reform to be passed by the end of the year
for medical cannabis while decriminalizing adult-use cannabis. Additionally,
state level progress continues to perform better than expectations, mosty
notably in Arizona, Virginia, and New York.
In the UK, we expect to see at least three cannabis related
listings on the LSE by the end of February which should garner attention of UK
and European investors. Pharmaceutical cannabinoids will also continue to gain
attention with the validation of GW Pharma’s model through the recent
CBDX continues to perform strongly with January returns of 15%.
Currently most of the upside is attributed to ancillary services which are
capitalizing on US reform momentum. We expect this to continue until reform is
actually passed at which time the baton will be passed on to the medical
cannabis sector. We expect 2021 to be a strong year for cannabis in the US and
beyond that we are excited to see the UK and Europe moving towards a more
progressive approach to cannabis.
The Medical Cannabis and
Wellness UCITS ETF, is a UCITS compliant Medical Cannabis ETF domiciled in
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.
Visit the CBDX Fund Page for more information.