Marijuana stocks have been a market theme for a while, but they haven't gained much mainstream attention because there simply aren't many good vehicles for traders and investors. There have been many pundits predicting that cannabis stocks will be very big in 2018 especially as more states, like California, legalize casual use, but how do we play this theme?
The best-known marijuana play in the U.S. markets is GW Pharmaceuticals (GWPH) , which is focused more on medical formulations rather than distribution of marijuana in its raw form. There are some other infrastructure plays such as Scotts Miracle-Gro (SMG) and Innovative Industrial Properties (IIPR) but the pure cannabis plays in the U.S. are very limited.
Most of the top marijuana plays are Canada-based and trade OTC. However, some traders, like me, don't like to trade OTC stocks or on foreign exchanges and have avoided names including Cronos Group (PRMCF) , Canopy Growth (TSX: WEED) and MedReleaf (TSX: LEAF) although they are leaders in the sector.
Last week an ETF called ETFMG Alternative Harvest (MJX) that is focused on the marijuana industry started trading on the NYSE. This ETF is designed to mirror the Prime Alternative Harvest Index, which tracks companies that are likely to benefit from increasing global acceptance of various uses of the cannabis plant."
MJX was previously trading as a Latin American real estate ETF but since changing to the cannabis focus this past week, volume has jumped sharply.
MJX is still much under the radar but I expect it to jump quickly in popularity in 2018 as market players look for a convenient way to play the marijuana niche.
