Cannabis ETF Changes: Amplify ETFs Revamp Funds To Boost US Exposure

Amplify ETFs announced the realignment of its cannabis ETFs to provide investors with dynamic exposure to the cannabis industry.

On Jan. 28, the Amplify Seymour Cannabis ETF CNBS will change its investment policy to invest in securities of U.S. companies engaged in cannabis and hemp-related activities. In addition, the Amplify Alternative Harvest ETF MJ will allocate to CNBS to gain exposure to U.S. cannabis companies following an index methodology change, according to company press release.

The move, per the company, reflects Amplify ETFs' commitment to refining its product suite for investors. Through the changes, MJ will continue to offer access to the global cannabis industry, now gaining its U.S. exposure through an allocation to CNBS within the index.

"The cannabis industry is an evolving market, and we recognized an exceptional opportunity to leverage the expertise of one of its foremost authorities, Tim Seymour. By doing so, we've positioned ourselves to enhance offerings and create what we believe is a competitive advantage," said Christian Magoon, CEO of Amplify ETFs.

Amplify ETFs, sponsored by Amplify Investments, has over $10.4 billion in assets across its suite of ETFs. By utilizing CNBS for its U.S. exposure, MJ provides a diversified investment strategy, representing global and domestic cannabis opportunities in one ETF.

CNBS is an actively managed cannabis ETF, which launched in July 2019. Tim Seymour, CIO of Seymour Asset Management and portfolio manager for CNBS, will refine CNBS' focus primarily on U.S. companies principally engaged in the emerging cannabis and hemp ecosystem.

"CNBS is uniquely positioned to capitalize on opportunities in the U.S. cannabis market through our active management strategy, and we view the US cannabis industry as the largest addressable market for sourcing cannabis investments. We seek exposure to the companies that are executing today and are well positioned for tomorrow's growth," Seymour said. "We believe the integration of CNBS into MJ's methodology enhances investor access to a dynamic and growing sector and look forward to working closely with Prime Indexes, who founded the MJ reference index."

Reverse Splits

MJ and CNBS will each participate in a reverse share split ratio of 1 for 12. The reverse splits will be effective on February 21, 2025 when the funds will begin trading at their post-split prices. The respective ticker symbols will not change, but each fund will be issued with new CUSIP numbers.

The reverse splits is expected to increase the price per share of each fund, with a proportionate decrease in the number of shares outstanding. For a one-for-twelve reverse split, every twelve pre-split shares will result in the receipt of one post-split share, which will be priced twelve times higher than the NAV of a pre-split share.

CNBS targets three classifications: cannabis/hemp plant operations, support cultivation and retail, and ancillary companies providing services and products to the cannabis market. At least 80% of its portfolio companies derive more than 50% of their revenue from cannabis and hemp-related activities.

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