Another Cannabis ETF Is In The Works

After three new marijuana exchange traded funds launched in July, bringing the total of cannabis ETFs listed in New York to five, another competitor could be coming to market.

What Happened

AdvisorShares, the company behind the AdvisorShares Pure Cannabis ETF YOLO, has filed plans for the AdvisorShares Pure US Cannabis ETF. A filing with the Securities and Exchange Commission indicates that the AdvisorShares Pure US Cannabis ETF will trade on the New York Stock Exchange under the ticker MJUS.

A listing venue and ticker being included in the filing could be signs that MJUS is close to coming to market. Like YOLO, MJUS will be actively managed. Assuming no new active cannabis ETFs come to market between now and the time MJUS debuts, that fund will become the fourth actively managed cannabis ETF in the U.S.

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Why It's Important

“In addition to its investment in securities of companies that derive a significant portion of their revenue from the marijuana and hemp business, and in derivatives providing exposure to such securities, the Fund may invest in securities of companies that, in the opinion of the Advisor, may have current or future revenues from cannabis-related business or that are registered with the DEA specifically for the purpose of handling marijuana for lawful research and development of cannabis or cannabinoid-related products,” according to the MJUS filing.

AdvisorShares has had some success with YOLO, which debuted in April and has $57.2 million in assets under management. The primary factor hindering the success of YOLO and rival rookie marijuana ETF is timing.

YOLO is off 23% since inception, but it's not alone in that slump. All three of the cannabis ETFs that launched last month have tumbled, too.

What's Next

As for the new MJUS, assuming that product comes to market, it will be the first cannabis ETF to focus on domestic marijuana firms.

“Cannabis securities may be categorized among a wide variety of sectors and industries including agriculture, biotechnology, pharmaceuticals, real estate, retail, and finance,” according to the SEC filing. “The types of companies that may engage in cannabis-related business include companies that conduct medical research, produce drug products, manufacture hemp products, or engage in agricultural activities, real estate activities, or financial services activities. The terms 'marijuana' and 'cannabis' are used interchangeably.”

The MJUS filing doesn't contain an expense ratio.

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