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A Cannabis ETF Adds Exposure To Multi-State Operators

ETF Professor

The AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the first actively managed cannabis exchange traded fund in the United States, is adding exposure to companies known as multi-state operators.

What Happened

YOLO's management team announced the addition of MSOs to the fund's roster one day after the debut of The Cannabis ETF (NYSE: THCX), the newest New York-listed marijuana ETF. YOLO is the first cannabis ETF trading in the U.S. to include MSOs.

MSOs “are U.S. based companies directly involved in the legal production and distribution of cannabis in states where approved,” according to a statement from AdvisorShares.

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Why It's Important

Examples of MSOs include Curaleaf (OTC: CURLF), Acreage Holdings (OTC: ACRGF), GreenThumb Industries (OTC: GTBIF), TerraTech (OTC: TRTC) and Golden Leaf (OTC: GLDFF).

“As more states legalize cannabis for medical or recreational-use, MSOs are believed to be a growth opportunity based on their ability to develop operational, distribution, marketing, and research and development efficiencies in multiple states where legal,” said Maryland-based AdvisorShares.

Curaleaf, GreenThumb and Cresco are among the MSOs currently found in YOLO's lineup. The fund's MSO exposure is, for the time being, light as those names reside toward the lower end of the ETF's roster. YOLO's top three holdings combine for about 20% of the fund's weight.

What's Next

MSOs are seen as fertile territory for marijuana industry consolidation and that could be longer-ranging catalyst for YOLO. For example, Green Growth Brands recently acquired MXY Holdings, which has a presence in California, Nevada and Pennsylvania, for $310 million in stock.

Last week, it was reported that “Orchid Ventures, Inc. (CSE: ORCD) (OTC: ORVRF) is acquiring certain assets of GreenBloom Cannabis Co., a vertically-integrated multi-state-operator in cannabis,” according to Forbes.

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