With more states considering legalizing cannabis, combined with the future uptick in sales from states such as New York and New Jersey that have recently legalized recreational cannabis, I expect that cannabis sales will continue to experience strong growth – I would be very surprised if U.S. cannabis sales do not breach the $20 billion mark in 2021.

Looking beyond 2021, sales growth should remain strong for the foreseeable future as more states legalize, and as more “canna-curious” consumers enter the market in states that are currently legal. In the longer term, as the cannabis industry continues to mature, I would expect to see the strongest sales growth in derivative products, such as cannabis-infused beverages.

The landscape is similar outside of the U.S. – more countries are expected to legalize in 2021, such as Mexico, and more consumers are transitioning to cannabis-related products in existing markets. Accordingly, I expect to see continued strong sales growth, in both the medical and recreational markets, outside of the U.S.

While the majority of MJ’s holdings relate to global cannabis producers, many of those producers (such as Aphria and Canopy Growth) have U.S. operations and distribution that will allow them to expand into the U.S. upon federal legalization. In some cases, certain of MJ’s portfolio companies will be able to immediately convert their existing contingent interests in U.S. operators into actual ownership upon federal legalization.

Additionally, MJ’s portfolio includes a number of companies that provide ancillary products and services, such as FDA-approved pharmaceuticals, growing equipment, and accessory products. Notwithstanding the fractured regulatory landscape in the U.S., these companies, such as GW Pharma and The Scott’s Miracle-Gro Company, that focus on ancillary segments have experienced strong success and sales growth with respect to their cannabis-related businesses.

MJ’s diversified portfolio is somewhat unique in this respect – not only is MJ positioned to benefit from companies that sell traditional cannabis and cannabis-related products, MJ is also structured to benefit from the growth of the ancillary segments and related products and services. Not only does this allow MJ to capture a broader segment of the emerging cannabis industry, it should also help mitigate some of the volatility that is inherent with any emerging market.

Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s statutory and summary prospectus, which may be obtained by calling 1-844-383-6477, or by visiting www.etfmg.com/MJ. Read the prospectus carefully before investing. Securities mentioned may or may not be current holdings in the Fund and are subject to change without notice.

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law. Federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal and recreational purposes. Cannabis companies and pharmaceutical companies may never be able to legally produce and sell products in the United States or other national or local jurisdictions.

The Fund’s investments will be concentrated in an industry or group of industries to the extent that the Index is so concentrated. In such event, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries. The consumer staples sector may be affected by the permissibility of using various product components and production methods, marketing campaigns and other factors affecting consumer demand. Tobacco companies, in particular, may be adversely affected by new laws, regulations and litigation. The consumer staples sector may also be adversely affected by changes or trends in commodity prices, which may be influenced or characterized by unpredictable factors.

ETF Managers Group LLC is the investment adviser to the Fund.

The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.

Author Portrait
With over 20 years of experience in the asset management, finance and structured product space, Jason has a track record of bringing hard-to-access asset classes to market. Most recently, Jason was Senior Vice President at INFOR Financial Inc., a leading boutique investment bank based in Toronto, Canada that has worked in connection with a number of companies in the legal cannabis industry, including acting as advisor to Canopy Growth Corporation in connection with entering into its strategic relationship with Constellation Brands.