Horizons ETF Management has launched the Horizons Emerging Marijuana Growers Index ETF (HMJR CN) on the NEO Exchange.

Steve Hawkins, President and Co-CEO of Horizons ETFs

HMJR replicates the Emerging Marijuana Growers Index which provides exposure to a basket of primarily North American publicly-listed small-capitalisation companies that are primarily involved in the cultivation, production and/or distribution of marijuana.

“HMJR will exclusively invest in marijuana growers that, in our view, are well-positioned to take part in the global growth of the marijuana sector,” said Steve Hawkins, President and Co-CEO of Horizons ETFs.

There are 26 holdings in the index, of which the top three exposures are: Cann Group, Auscann Group and Mpx Bioceutical. These three represent roughly 20% of the total index exposure. Total exposure by country is heavily weighted towards Canada at 79%. Exposure to Australia represents the remaining 21%.  

The ETF has a management fee of 0.85% which is relatively high for a passively managed ETF.

The NEO Exchange is a next-generation Canadian stock exchange which saw its first ETF listed on its platform in February 2016. It is now home to more than 60 ETF listings.

Redwood Asset Management has also recently launched a marijuana ETF on the NEO Exchange. The Marijuana Opportunities Fund (MJJ CN) is currently the only actively managed ETF to focus exclusively on equities tied to the marijuana or marijuana-related industries.

Canadian demand set to rise

Cannabis companies are raising significant capital to increase capacity in anticipation of higher demand once recreational cannabis is legalised in Canada. This has resulted in significant investor interest in the cannabis sector. According to Statistics Canada, in 2017 Canadians spent approximately $6 billion on marijuana. This demand is expected to rise after legalisation; the entire legal marijuana market is expected to reach $24.5 billion in sales by 2021.