| New Marijuana ETF Ablaze As California Legalizes Retail Sales|
Ky Trang Ho , CONTRIBUTOR
Margot Simpson, right, and Diana Gladden wait in line to purchase marijuana at Harborside marijuana dispensary, Monday, Jan. 1, 2018, in Oakland, Calif. Starting New Year's Day, recreational marijuana can be sold legally in California. (AP Photo/Mathew Sumner)
Marijuana stocks skyrocketed on the first trading day after California legalized retail sales, unleashing the largest legal market in the country. Thanks to the new California marijuana laws allowing recreational use for people ages 21 and up as of Jan. 1, imbibers are bombarding dispensaries. Lines snake around the block as if Apple just released a new iPhone.
The new marijuana ETF that rolled out only one week prior — ETFMG Alternative Harvest ETF — blasted 9%. It’s up 18% in just one week. Its Canadian counterpart with many overlapping holdings, Horizons Marijuana Life Sciences ETF, lit up 12%.
Medreleaf blasted 29%, giving new meaning to getting high.Aurora Cannabis and Emerald Health Therapeutics rallied 24% and 20%, respectively. Canopy Growth — the world’s largest marijuana stock by market cap — popped 9.4%.
At the same time, a new marijuana industry report from ArcView Market Research poured gasoline on the proverbial bonfire.
“The total economic output from legal cannabis will grow 150% from $16 billion in 2017 to $40 billion by 2021,” Arcview said in a statement. “U.S. consumer spending on legal cannabis in 2021 of $20.8 billion will generate $39.6 billion in overall economic impact, 414.000 jobs, and more than $4 billion in tax receipts.”
"The legalization of adult-use sales in California will lead to the creation of nearly 99,000 cannabis industry jobs in the state by 2021, about a third of all cannabis jobs nationwide, and 146,000 jobs overall when indirect and induced effects are considered.
By 2021, direct cannabis industry employment will top 291,500 FTE jobs, with a total employment effect of nearly 414,000 FTEs across all legal cannabis states.
Six of the early movers in legal adult-use implementation (California, Colorado, Massachusetts, Nevada, Oregon, and Washington) will account for more than 60% of that $39.6 billion in 2021 total economic output. Medical-use states will see a far less positive economic impact, while the hold-out states will see none.
The legal cannabis industry may have been a key factor in lowering Colorado’s unemployment rate to one of the lowest in the nation.
Conservative estimates show more than $1 billion dollars in wholesale, excise, and cannabis-specific sales taxes were taken into state treasuries during 2016. That number is forecast to grow to just over $1.4 billion in 2017 and then to nearly $2.8 billion by 2021. With additional state and local general sales taxes, that 2021 figure could be between $4 billion and $4.7 billion."
ETFMG Alternative Harvest ETF, trading under the ticker MJX, tracks 30 companies “likely to benefit from the increasing global acceptance of various uses of the cannabis plant.”
It makes sense that ETFMG Alternative Harvest ETF includes biotech and pharmaceutical companies. But the handful of tobacco companies in the portfolio is baffling. It’s unclear how they would benefit.