Though the medical marijuana industry is booming in the legal American states, it has still been difficult to invest in the cannabis companies. Fortunately, a Canadian fund that has recently opened on the Toronto Stock Exchange will allow you to do it in the comfort of your home.
The Horizons Medical Marijuana Life Sciences exchange-traded fund has appeared on the Toronto Stock Exchange. It is the first marijuana-focused fund in the world that includes 14 stocks. The fund uses the North American Medical Marijuana Index as a benchmark. Ten stocks are the licensed medical marijuana producers based in Canada, while the other three are non-Canadian pharmaceutical companies. The fund also includes Scotts Miracle-Gro, a U.S. fertilizer giant.
Last year, the medical marijuana markets in Canada and the U.S. brought $6.7 billion in revenue, which was 30 percent more than in 2015. However, American banks are not allowed to deal with marijuana companies, as the substance is still prohibited under federal law.
Canada legalized medical marijuana in 2001, and the liberal government is going to make the drug legal for adult use by July 1, 2018. Thus, the marijuana industry is becoming quite attractive for investors.
However, the fund will not provide money to American companies as most banks do not work with marijuana businesses. U.S. firms have to deal with huge sums of cash to carry out their activities. Subsequently, this situation creates obstacles for potential investors.
However, if you are an investor from the U.S., you will not be refused in participating. As an investor from America or any other country other than Canada, you can purchase ETFs on the Toronto Stock Exchange provided that it is allowed by your brokerage platform.
Keep in mind that you might be requested to buy Canadian dollars before executing the trade.
Moreover, some brokerage companies do not hold securities in foreign currencies, thus you need to provide a U.S.-registered security if you want to trade in USD.
In contrast, other brokerage platforms do not deal with non-U.S. participants for exchange traded products, thus you should find out the attitude of your brokerage company to these foreign investments.
The fund is mainly targeted at investors who are interested in the marijuana industry and want to invest in its future growth.
The fund requires 0.75% of annual management fee and applicable sales tax. The ETF's trading costs and operating expenses will be available in the near future. The fund rebalance is settled to take place on a quarterly basis ensuring that the price of one stock will not be more than 10 percent of the overall fund.