Amplify becomes latest issuer to launch cannabis ETF

Jul 24th, 2019 | By | Category: Equities

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Amplify ETFs has joined a growing list of issuers in North America to launch an ETF focused on the cannabis industry.

Tim Seymour, CIO of Seymour Asset Management

Tim Seymour, CIO of Seymour Asset Management.

The actively managed Amplify Seymour Cannabis ETF (CNBS US) has listed on NYSE Arca and comes with an expense ratio of 0.75%.

Early-stage cannabis investor Tim Seymour, CIO of Seymour Asset Management, will act as the portfolio manager for the fund.

“The global legal cannabis industry is still very much in its infancy and presents an attractive growth opportunity for investors looking to capitalize on this emerging frontier,” said Seymour.

“Amplify has a track record of offering investors access to disruptive areas of the market via the ETF structure, and the cannabis industry certainly fits this mold.”

Christian Magoon, Founder and CEO of Amplify ETFs, added, “Cannabis and hemp are seeing a new wave of potential use cases across multiple industries, and investors are eager to gain access to this emerging sector. Tim is a recognized voice and active investor in the cannabis space, and we’re excited to harness his investment expertise and specialized insights to navigate and capture the expanding opportunity in the rapidly evolving industry.”

The fund invests in companies worldwide but is expected to focus on firms listed on either US or Canadian exchanges. US-listed and international-listed firms are required to have minimum market capitalizations of $75 million and $100m, respectively.

Eligible firms must derive at least 50% of their revenue from the cannabis and hemp ecosystem and will be sourced from three main categories: those that produce hemp and cannabis products; those that support cannabis production such as through the supply of agricultural technology, real estate, and commercial services; and ancillary companies including investment, finance, technology, and media firms.

Companies must also be federally legal in the countries they operate within (i.e. permitted to operate throughout the country, not just in a particular region or state) and are not allowed to produce cannabis for non-medical purposes. Due to this constraint, the ETF will avoid companies with significant growing and distribution operations within the US.

The fund combines top-down and bottom-up approaches to select a portfolio of approximately 35 to 45 stocks.

The Amplify Seymour Cannabis ETF is the fourth US-listed ETF to target the cannabis industry, and the third to launch this year, as issuers scramble to capture a slice of one of the fastest-growing thematic trends of the past few years.

The largest of the other three cannabis funds is ETFMG Alternative Harvest ETF (MJ US) which has benefitted from being the first-mover, having launched in October 2017. It has $1.1 billion in AUM and an expense ratio of 0.74%.

The other two funds are the $60m AdvisorShares Pure Cannabis ETF (YOLO US) and Innovation Shares Cannabis ETF (THCX US), which listed in April and July, and come with expense ratios of 0.75% and 0.70%, respectively.

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