The marijuana business is rightly described as a fledging industry. But what investors see as a potential promised land may be further off than many expect because full federal legalization may take a long time.
The Canadian licensed producers do not sell cannabis products in the U.S. because it is against U.S. law. But shares of the largest five are listed on the Nasdaq exchange or the New York Stock Exchange:Meanwhile, the four largest U.S. companies selling marijuana products in states where recreational use is legal aren’t listed on U.S. exchanges because they are engaged in activities that are technically illegal on the federal level. They are listed over the counter.
AdvisorShares has been able to work around this problem by purchasing MSO stock total return swaps in the AdvisorShares Pure Cannabis ETF YOLO, +3.90% and the AdvisorShares Pure US Cannabis ETF MSOS, +4.38%. The Securities and Exchange Commission required AdvisorShares to get an outside legal opinion about the total return swaps, which you can read on the AdvisorShares website.
The most recent quarter is marked Q0, the previous quarter is Q-1, and so on. All data in all the tables is in millions of U.S. dollars.Scroll the table to see all the data. For four quarters, the five LPs had combined sales of $1.284 billion, which was up 24% from the previous four-quarter period. If we divide the combined market capitalization of $33.785 billion by the past four quarters’ sales, the trailing price-to-sales ratio for the group is 26.3.
A counter-argument YOLO and MSOS are actively managed. The only other actively managed Cannabis ETF is the Amplify Seymour Cannabis ETF CNBS, +2.67%. You can read more about CNBS here. “I am investing in companies that I believe are representative of the best exposure to investors for the best returns right now,” Seymour said. He also emphasized the importance of active management in the space.