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First medical cannabis ETF available for Europe

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Europe is poised to see the first launch of an ETF (exchange traded fund) that is dedicated to the cannabis sector. It is being co-sponsored by HANetf and Purpose Investments of Canada. The Medical Cannabis and Wellness ETF is scheduled to launch on Deutsche Boerse in Frankfurt in the week of 13 January, according to HANetf.

Domiciled in Ireland, and passported for sale in the UK and Italy, the Medical Cannabis and Wellness ETF offers targeted exposure to the medical cannabis industry, a sector which has undergone massive transformation over the last couple of years.

Medicinal cannabis is a growth market

Medical cannabis and cannabidiol (CBD) products are already being used to treat a wide range of medical conditions, including cancer, epilepsy and chronic pain. Such products are now legal in more than 40 countries including 28 European countries.

As of 2018 the global medical cannabis market was valued at $13.4 billion. It is widely forecast to continue to grow, attaining a value of close to $148 billion by 2026.

According to recent studies by Grandview Research, the legal cannabis market is expected to exceed $65 billion in value by 2025, representing a CAGR of 23.9%. Demand is also expected to be boosted by the prevalence of neurological disorders among the aging population in the developed world, among them Alzheimer’s and Parkinson’s disease.

Outside the US and Canada, other promising markets identified for cannabis products include Germany, Poland, Israel and Australia. The UK is still considered a relatively new market for medical cannabis, but it is starting to open up.

An easy way to tap into the cannabis growth story?

The new ETF represents an easy way for investors to tap into the medical cannabis growth story. It has been designed by Purpose Investments, a Canadian ETF specialist which has over $8 billion is assets under management. Purpose has a good grasp of the medical cannabis sector, having launched a cannabis fund in 2017 for the Canadian marketplace.

“We believe that the cannabis sector is still in the infancy stages of a multi-year growth phase and that there is an ample opportunity for innovation and new discoveries,” says Som Seif, CEO of Purpose Investments.

The ETF is following a rule-based index, the Medical Cannabis and Wellness Equity Index, which is provided by Solactive. Its underlying investments are publicly listed companies conducting legal business activities in the medical cannabis, hemp and CBD industries across nine thematic sub-sectors.

The companies in the index include producers and suppliers of medical cannabis, CBD-focused biotech companies, producers of medical cannabis consumer products and companies that are leasing property to cannabis growers.

“Up until now European investors have experienced restricted access to the cannabis market,” explains Hector McNeil, co-founder of HANetf. “With the launch of this truly innovative ETF there is now a product for investors who want exposure to the cannabis industry through a pre-screened basket of cannabis securities and in a regulated UCITS ETF. It is also a great way to diversify, as investors don’t need to research each individual security and the ETF may withstand the short term volatility of indivual securities, potentially making for a lower risk, longer term investment.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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