Tuesday , 17 September 2019


Cannabis Central: How Much Of A Pure Play Is The Pure Cannabis ETF?

The AdvisorShares Pure Cannabis ETF debuted this past May as an actively “pure” fund of 28 constituents. Just how pure are the constituents?

The ETF (YOLO):

  • is actively managed
  • has an expense ratio of 0.74%,
  • holds $59.89M in assets under management (AUM)
  • has an average beta of 3.2.
Holdings (as of: Aug 16, 2019)
Weighting
Cash Component 17.58%
1. Innovative Industrial Properties Inc (NYSE:IIPAinnovativeindustrialproperties.com

  • a REIT engaged in the acquisition, ownership & management of industrial properties leased to state-licensed operators for their regulated medical-use cannabis facilities
  • Mkt. Cap: $1.1B; Beta: 2.0
6.44%
2.  Village Farms International Inc. (TSX:VFF; Nasdaq:VFF) villagefarms.com

  •  owns and operates agricultural greenhouse facilities exporting its products exclusively to the U. S.
  • Market Cap: $741.0M; Beta: 3.8
6.06%
3. Charlotte’s Web Holdings Inc. (TSX:CWEB; OTCQX:CWBHF)   www.charlottesweb.com

  • a producer and distributor of hemp-based CBD products for the U.S. market
  •  Mkt. Cap: $871.4M; Beta: 2.9
5.02%
4. OrganiGram Holdings Inc. (TSXV:OGI, NASDAQ:OGI) www.organigram.ca

  • focuses on producing indoor-grown cannabis for medical and recreational use consumers and developing global business partnerships
  • Mkt. Cap: $1.4B; Beta: 9.7
4.90%
5. Hexo Corp. (TSX:HEXO; NYSE:HEXO) www.hexo.com

  • creates and distributes innovative recreational-use products under the HEXO brand and medical cannabis under the Hydropothecary brand
  • Market Cap: $1.6B; Beta: 4.0
4.89%
6. Neptune Wellness Solutions Inc. (TSX:NEPT) www.neptunecorp.com

  • a health and wellness products company engaged in extraction, purification, and formulation of value-added products for both recreational and pet nutrition use
  •  Market Cap: $470.0M; Beta: 1.5
4.00%
7. Cara Therapeutics Inc. (Nasdaq: CARAwww.caratherapeutics.com

  • an emerging biotechnology company involved in the development of novel therapeutics to treat human diseases associated with inflammation, pain, and pruritus
  • Market Cap: $1.0B; Beta: 2.2
3.82%
8. Aphria Inc. (TSX:APHA; NYSE:APHA) www.aphria.com

  • produces and sells medical marijuana and its derivatives through retail sales and wholesale channels
  • Market Cap: $2.2B; Beta: 2.7
3.81%
9. Canopy Growth Corp. (TSX:WEED; NYSE:CGC) www.canopygrowth.com

  • cultivates and sells medicinal & recreational cannabis, and hemp with distribution and production licenses in more than a dozen countries
  •  Market Cap: $18.5B; Beta: 4.1   
3.77%
10. Aleafia Health Inc. (TSX:ALEF, OTCQX:ALEAF) aleafiahealth.com/

  • a vertically integrated cannabis health and wellness company operating 3 product and cultivation facilities and a national network of medical cannabis clinics
  • Mkt. Cap: $304.7M; Beta: 3.3
3.46%
11. Zynerba Pharmaceuticals Inc. (Nasdaq:ZYNEwww.zynerba.com

  • a pharmaceutical company focused on developing and commercializing synthetic cannabinoid therapeutics formulated for transdermal delivery
  •   Mkt. Cap: $227.6M; Beta: 4.9;
3.39%
12. Arena Pharmaceuticals Inc. (Nasdaq:ARNA) www.arenapharm.com

  • a biotechnology company targeting G-protein-coupled receptor
  •  Mkt. Cap: $3.1B; Beta: 1.4
3.34%
13. Aurora Cannabis Inc. (TSX:ACB; NYSE:ACB) www.auroramj.com

  • cultivates and sells medicinal and recreational cannabis in more than 20 countries through medical cannabis exporting agreements or cultivation facilities
  • Market Cap: $10.0B; Beta: 1.6
3.28%
14. WeedMD Inc. (TSXV:WMD, OTCQX:WDDMF) www.weedmd.com

  • a licensed producer and distributor of medical cannabis focused on providing medicine to the long-term care and assisted living markets in Canada
  •  Mkt. Cap: $172.9M; Beta: 3.1
3.04%
15. Tilray, Inc. (Nasdaq:TLRY)  www.tilray.com

  • cultivates and sells medical and recreational cannabis in Canada; sells CBD products in the U.S.; exports medical cannabis globally from its production facilities in Canada and Portugal[ and has a partnership with AB InBev to develop cannabis-infused drinks
  •  Mkt. Cap: $4.1B; Beta: 4.2
2.68%
16. The Green Organic Dutchman Holdings Ltd. (TSX:TGOD, OTCQX:TGODF) www.tgod.ca

  • a cannabinoid-based research & development company in Canada that produces and distributes cannabis and hemp-related products for medical applications
  •  Mkt. Cap: $913.7M; Beta: 5.0
2.54%
17.  Supreme Cannabis Company Inc. (TSX:FIREwww.supreme.ca

  • a globally diversified portfolio of 7 distinct cannabis companies, products and brands
  • Mkt. Cap: $424.5M; Beta: 4.0
2.45%
18. Corbus Pharmaceuticals Holdings Inc. (Nasdaq:CRBPwww.corbuspharma.com

  • a Phase 3 clinical-stage pharmaceutical company
  • Mkt. Cap: $395.1M; Beta: 1.8
2.43%
19. Emerald Health Therapeutics Inc. (TSXV:EMH, OTCQX:EMHTF) www.emeraldhealth.ca

  •  a vertically integrated Canadian licensed producer focused on developing proprietary cannabis products for medical and adult-use customers
  •  Mkt. Cap: $333.1M; Beta: 1.8
2.40%
20. Canopy Rivers Inc. (TSXV:RIVwww.canopyrivers.com

  • a venture capital company that pursues investment opportunities in the cannabis sector via royalties, joint ventures, secured debt and other equity/equity-linked instruments
  • Mkt. Cap: $166.7M; Beta: 4.5
2.27%
21. Khiron Life Sciences Corp. (TSXV:KHRN, OTCQB:KHRNF) www.khiron.ca

  • involved in cultivating, producing, and distributing THC and CBD medicinal extracts
  • Mkt. Cap: $241.9M; Beta: 4.5
1.92%
22. Medipharm Labs Corp. (TSXV:LABSwww.medipharmlabs.com

  •  produces purified, pharmaceutical-grade cannabis oil and concentrates
  • Market Cap: $778M; Beta: -0.66
1.87%
23. CannTrust Holdings Inc. (TSX:TRSTwww.canntrust.ca

  • engaged in the business of producing and distributing medical cannabis in Canada
  • Market Cap: $502.6M; Beta: 4.4
1.33%
24. cbdMD Inc. (NYSE American: YCBDwww.cbdmd.com

  • markets its hemp-based CBD brand, cbdMD through an e-commerce website, wholesalers and a variety of brick and mortar retailers in the U.S..
  • Market Cap: $118.4M; Beta: -0.68
1.30%
25. Greenlane Holdings Inc. (Nasdaq:GNLNwww.gnln.com

  •  a distributor of vaporizers & parts, cleaning products, grinders & storage containers, pipes, rolling papers and customized lines of premium specialty packaging in the U.S.
  • Mkt. Cap: $317.1M; Beta: -1.9
0.95%
26. Cardiol Therapeutics Inc. (TSX: CRDLwww.cardiolrx.com

  • is developing unique expertise in the production of pharmaceutical cannabinoids in support of its nanotherapeutics program in heart failure
  • Market Cap: $107M; Beta: 5.9
0.82%
27. Intec Pharma Ltd. (Nasdaq:NTECwww.intecpharma.com

  • a clinical stage bio-pharmaceutical company based in Israel
  • Mkt. Cap: $18.7M; Beta:?
0.24%

Summary of ETF Makeup

  • Asset Allocation
    • Common Equity (82%)
    • Cash Component (18%)
  • Sector Breakdown
    • Cultivation/Extraction (55.55%)
    • Cash Component (17.58%)
    • Bio-Pharmaceutical (14.04%)
    • Real Estate (6.44%)
    • Consumer, Non-Cyclical (4.12%)
  • Market Cap Breakdown
    • Micro cap (55%)
    • Cash Component (18%)
    • Small cap (15%)
    • Mid cap (12%)
  • Country Breakdown
    • Canada (53%)
    • United States (47%)

Stock Performance

As can be seen in the chart below The Cannabis ETF has had a rocky start since its launch on May 1st of this year. It is down 22.7% since inception and down 8.4% alone since August 13th.

Conclusion

It is my contention that this ETF is anything but a pure play in the cannabis sector given its preponderance of  bio-pharmaceutical companies (6), distributors (3), a REIT (1) and a venture capital company (1) representing 26.87% weighting in the ETF and the current 17.58% currently in cash. That leaves only 55.55% operating in the growing, production, extraction and sale of cannabis.

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