3 Ways to Trade an Upcoming Vote on Cannabis

May 11, 2023

Top Ways to Trade the Senate Banking Committee’s Vote on Cannabis

Keep an eye on cannabis stocks.

The Senate Banking Committee is holding a hearing on a bipartisan bill that would allow cannabis companies to access traditional banking services — which many see as critical to their survival. The meeting, titled “Examining Cannabis Banking Challenges of Small Businesses and Workers,” will hear testimony from lawmakers on both sides of the aisle, including Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., who reintroduced the bill last week. 

The hearing will determine next steps in getting the bill to the U.S. Senate, where Senate Majority Leader Chuck Schumer supports it.

While you can always invest in cannabis stocks, like Tilray and Canopy Growth, ETFs offer greater diversification at low cost.

ETFMG Alternative Harvest ETF (MJ)

With an expense ratio of 0.75%, the MJ ETF tracks the Prime Alternative Harvest Index, designed to measure the performance of companies within the cannabis ecosystem benefitting from global medicinal and recreational cannabis legalization initiatives.  Some of its top holdings include Canopy Growth, Cronos Group, Aurora Cannabis, and OrganiGram Holdings.

Global X Cannabis ETF (POTX) 

With an expense ratio of 0.50%, the ETF seeks to invest in companies across the cannabis industry. This includes companies involved in the legal production, growth and distribution of cannabis and industrial hemp, as well as those involved in providing financial services to the cannabis industry, pharmaceutical applications of cannabis, cannabidiol (i.e., CBD), or other related uses.  Some of its top holdings include Canopy Growth, HEXO Corp., and AFC Gamma.

Advisor Shares Pure US Cannabis (MSOS)

With an expense ratio of 0.73%, the ETF is the first actively managed U.S.-listed ETF with dedicated cannabis exposure focusing exclusively on U.S. companies, including multi-state operators. The portfolio manager allocates across an investable universe of U.S. companies spanning a variety of cannabis-related businesses.  Some of its top holdings include Green Thumb Industries, Curaleaf Holdings, Cresco Labs, Jushi Holdings, and GrowGeneration Corp.

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