Amplify To Liquidate Cannabis-Focused MJUS ETF As Regulatory Uncertainty Weighs On Sector

Amplify ETFs announced Wednesday that it plans to liquidate the Amplify U.S. Alternative Harvest ETF MJUS, with trading set to end Jan. 27.

The Amplify U.S. Alternative Harvest ETF has a significant allocation to cannabis-related companies like Green Thumb Industries GTBIF and Curaleaf Holdings CURLF. The fund’s price has eroded more than 50% over the last year as the cannabis sector continued to struggle with regulatory issues.

This uncertainty has weighed on cannabis stocks, as reflected in the 45% decline in the AdvisorShares Pure US Cannabis ETF MSOS in 2024.

Shareholders will receive a final cash distribution, based on the fund’s net asset value on or around Jan. 30. Amplify Investments said that it will cover all liquidation-related fees and expenses, barring brokerage fees and related costs.

Reads More: DEA Accused Of Bias In Cannabis Rescheduling Hearings: Weed Stocks Plummeted In 2024 As Process Drags On

Regulatory Roadblocks Stifle Growth

A key reason behind the unsteadiness in the cannabis industry — and funds like MJUS — is the Drug Enforcement Administration’s role in maintaining marijuana’s classification as a Schedule I drug under the Controlled Substances Act, a categorization reserved for substances with no medical use and a high potential for abuse. This has led to limitations on research, banking and taxation for cannabis businesses.

Although the U.S. Department of Health and Human Services recommended rescheduling marijuana to Schedule III, which would ease some federal restrictions, the DEA has the final say. The agency's cautious stance on cannabis rescheduling and the uncertainty around the decision is impacting investor confidence.

Broader Impact on Cannabis ETFs

MJUS is not alone in facing these challenges. ETFs with high exposure to cannabis stocks are also struggling from weak financial performance to limited capital access. The DEA's lack of action has left cannabis firms, and the funds that track them, vulnerable. Funds like AdvisorShares Vice ETF VICE, Cambria Cannabis ETF TOKE and Roundhill Cannabis ETF WEED did not have their best year in 2024.

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