Merry Christmas: A Marijuana ETF Is On The Way
Aside from pondering the fate of bitcoin exchange traded funds, perhaps the most demanded though still not existent exchange traded product in the U.S. is a marijuana ETF. That's slated to change right after Christmas.
The Tierra XP Latin America Real Estate ETF (NYSE:LARE) is undergoing a major overhaul that will see the ETF drop its focus on high-yield Latin American real estate investments and shift to companies with cannabis business exposure.
“A Cannabis Company is considered to be primarily engaged in a described line of business if it derives more than 50% of its revenue from such activity,” according to a filing with the Securities and Exchange Commission.
“The Cannabis Companies would be expected to possess all necessary permits and licenses to legally grow cannabis. Because the Index, and the Fund’s portfolio, only includes companies that are currently engaged exclusively in legal activities under applicable national and local laws, the Cannabis Companies will not include any company that engages in the cultivation, production or distribution of marijuana or products derived from marijuana for medical or non-medical purposes in a particular country, including the United States, unless and until such time as the cultivation, production or distribution of medical or non-medical marijuana, as applicable, becomes legal under all local and national laws governing the company in such country.”
News of LARE's overhaul was originally reported by ETF.com.
On Dec. 26, LARE will become the Alternative Agroscience ETF and will track the Alternative Agroscience Index.
That index can include companies that “engage in the lawful creation or marketing of prescription drugs that utilize cannabinoids as an active ingredient and engage in the creation, production and distribution of fertilizers or pesticides to be used in the cultivation of tobacco and that can be used in the cultivation of cannabis,” according to the SEC filing.
The benchmark can also include tobacco producers and cigarette manufacturers. Only legal producers of cannabis-related fare are included and the benchmark excludes firms that are in violation of federal or state marijuana laws. California and Colorado are among the states where marijuana is legal for recreational purposes and California, the largest marijuana grower in the U.S., is expected to open its first legal, non-medicinal marijuana dispensaries in 2018.
North Of The Border
Just as it was home to the first ETF, Canada is home to the first marijuana ETF, the Horizons Medical Marijuana Life Sciences Index ETF. That ETF, which debuted in April, has $203.5 million in assets under management, according to issuer data.
The Horizons fund has traded modestly higher since inception.
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