After the Medical Cannabis and Wellness UCITS ETF delivered a 40.4% return in its first last 12 months, the portfolio manager says there are significant tailwinds driving the cannabis industry on both sides of the Atlantic in 2021.
With the inauguration of Joe Biden as US president as the Democrats make the Capitol a stronghold and planning a huge new stimulus package, Nawan Butt of Purpose Investments sees strong drivers for the sector.
“The US cannabis trade is now running full steam ahead,” he said.
“With a ‘blue wave’ there is significant upside for the cannabidiol (CBD) wellness and ancillary services industries in the US, which are sharing the growth rates of the underlying cannabis industry.”
He points to multiple federal cannabis bills expected to be tabled soon and also at the state level as pandemic hit government coffers look towards taxation revenues for some relief.
“States such as New York, Virginia, and even Texas are debating now the advantages of cannabis legalization and its impact on job creation, social inequality, and most importantly tax revenues,” he said.
The Medical Cannabis and Wellness ETF, which this week celebrates its first anniversary of listing in London and Frankfurt, is the product of a collaboration between Purpose Investments and HANetf.
Before the launch of the ETF, European investors interested in the sector mainly had to buy North American cannabis stocks.
“CBDX fixes a big problem for investors and their brokers as it can be hard for them to assess if that company is generating revenues in cannabis activities that may not be legal in Europe but are permitted in the US & Canada,” says HANetf co-founder Hector McNeil.
Momentum is strong, with the ETF up over 60% since the start of October.
In 2021, there should also be impetus from the UK, with multiple cannabis operators racing to list on the London Stock Exchange in the first half of this year.
Cannabis patient numbers in the UK are also rising at a consistent pace, Butt says, even before the Project 2021 initiative really builds traction.
This UK project, set up by the Drug Science non-profit research group, aims to create the largest body of evidence for the effectiveness and tolerability of medical cannabis by the end of this year and Butt says it should make both physicians and patients more comfortable with cannabis as a mainstream rather than fringe treatment.
As for Hector McNeil co-CEO at HANetf said “CBDX was a market first for Europe. It also is a flagship ETF in HANetf’s burgeoning, innovative and broad range of thematic ETFs offering exposure to similar mega trends as medical cannabis. CBDX has had superb performance with just under 40% performance over the last 3 months and clearly great tailwinds to see that momentum going forward.”