AdvisorShares Pure US Cannabis ETF: a Good Vehicle to Approach the Buzzword Еmerging Sector

The cannabis industry is still in its early stages, although it's outlook has somewhat weakened as compared to around this time last year. The main reason is that the degree of willingness and readiness to adopt corresponding State laws is a mixed bag. Currently, 14 states allow recreational marijuana use and 36 have authorized medical marijuana; in those states, cannabis sales surged 46% in 2020 to a record $17.5 billion. Some outlets estimate sales may grow to nearly the size of the craft beer industry, or $41 billion, by 2026 -- and if marijuana were legalized, it could move in on $100 billion in annual black-market pot sales.

As a result, cannabis stocks have been hit hard by market turbulence over the past couple of weeks. Several names that are down between 5% and 10% for the week are extending losses seen over the past month. These include the following companies: Tilray (TLRY), Aurora Cannabis (ACB), and HEXO (NYSE: HEXO) – all have dropped 17%, 18%, and 28%, respectively, while shares of U.S.-based cannabidiol (CBD) company Charlotte's Web Holdings (CWBHF) have dropped more than 27% over the last 30 days thereby offering an attractive entry point for investors.

Federal marijuana legalization watch in the U.S. is still seen as a main driver for pot stocks’ recovery stories. The Marijuana Opportunity Reinvestment and Expungement Act of 2021, or MORE Act, was introduced in the House of Representatives recently and pending approval later this year. The main issue is decriminalization of marijuana and expunge the records of individuals who were previously convicted because of marijuana use, while setting up a regulatory framework for legalization.

Individual stories of these stocks are pretty much the same – so are their valuations after this year’s meaningful correction, subject to individual liquidities. Therefore it makes sense to get exposure to this emerging sector by means of owning a sector-dedicated ETF. AdvisorShares Trust - AdvisorShares Pure US Cannabis ETF (MSOS)– is an exchange traded fund launched and managed by AdvisorShares Investments. The fund invests in public stocks of the marijuana and hemp industry – directly and through derivatives. The fund is an actively managed ETF that seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the corresponding sector in the U.S. It also concentrates at least 25% of its investments in the pharmaceuticals, biotechnology and life sciences industry group within the health care sector.

Cannabis ETFs got a boost yesterday, on July 8, 2021, The move was helped by Connecticut's legalization and word of the activity on the matter taking place in Rhode Island. Other rival ETFs include Alternative Harvest ETF (MJ), AdvisorShares Pure Cannabis ETF (YOLO), Amplify Seymour Cannabis ETF (CNBS) and Spinnaker ETF Series The Cannabis ETF (THCX).