In a move toward the legalization of marijuana at the federal level, on Apr 19, the U.S. House of Representatives okayed legislation that would allow banks to provide services to cannabis companies in states where it is legal. So far, 36 states have legalized medical cannabis while 17 states gave the green signal for adult use.
The bill elucidates that the proceeds from legitimate cannabis businesses would not be considered illegal and directs federal regulators to formulate rules for how they would oversee such banking activity. Banks so far have generally been reluctant to do business with companies that are into marijuana dealing, dreading they could fetch backlash from federal law and order.
As a result, companies in the marijuana industry had to rely mainly on a few small financial institutions or doing business in cash,
per Reuters. This, in turn, restricted the industry’s growth. Lawmakers voted 321-101 to approve the bill (touted as "SAFE Banking Act" bill) and send it to the Senate.
Senate Majority Leader Chuck Schumer, in an early-April interview with Politico, said he would try to push forward legislation toward legalizing marijuana use for adults. He said that he would like to see the Safe Banking bill a reality even though President Joe Biden was not supportive, as quoted on the Reuters article.
Against this backdrop, below we highlight a few cannabis ETFs that could gain in the coming days (read:
Cannabis On a Roll: Guide to ETF Investing). ETFMG Alternative Harvest ETF ( MJ Quick Quote MJ - Free Report)
The underlying Prime Alternative Harvest Index enables investors to take advantage of both event-driven news and long-term trends in the cannabis industry as well as the industries likely to be influenced by the medicinal and recreational cannabis legalization initiatives taking place in many locations globally. It charges 75 bps in fees. The fund gained 2.4% after hours on Apr 19.
AdvisorShares Pure US Cannabis ETF ( MSOS Quick Quote MSOS - Free Report)
This ETF is active and does not track a benchmark. The fund looks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the marijuana and hemp business in the United States, and in derivatives that have economic characteristics similar to such securities. The fund charges 74 bps in fees. The fund was up 1.7% after hours on Apr 19.
AdvisorShares Pure Cannabis ETF ( YOLO Quick Quote YOLO - Free Report)
This was the first actively managed ETF with a dedicated cannabis exposure available in the United States. The fund charges 75 bps in fees. It advanced 0.1% after hours on Apr 19.
Global X Cannabis ETF ( POTX Quick Quote POTX - Free Report)
The underlying Cannabis Index provides exposure to exchange-listed companies that are active in the industry. It charges 51 bps in fees. The fund added 0.3% after hours on Apr 19.
Cannabis ETF ( THCX Quick Quote THCX - Free Report)
The underlying Innovation Labs Cannabis Index is a proprietary, rules-based index designed to track the performance of a portfolio of cannabis companies. These companies are primarily located in the United States and Canada, but may be located in other countries as well
.The fund charges 70 bps in fees. It moved 2.9% higher after hours on Apr 19. Amplify Seymour Cannabis ETF ( CNBS Quick Quote CNBS - Free Report)
This ETF is active and does not track a benchmark. The fund is managed by Tim Seymour, a known and experienced investor in the cannabis space. The fund charges 75 bps in fees. It jumped 2.8% after hours on Apr 19.
Cambria Cannabis ETF ( TOKE Quick Quote TOKE - Free Report)
This ETF is active and does not track a benchmark. The fund seeks capital appreciation from investments in the global equity markets that have exposure to the broad cannabis industry. It charges 42 bps in fees. The fund added 0.3% after hours on Apr 19.
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