Cannabis investors actually had a great year in 2017. Returns were impressively high, and the first cannabis-focused ETF available to US investors was successfully launched, the ETFMG Alternative Harvest ETF (MJX). However, with the fund’s shift of focus to marijuana, custodian firm Bancorp’s worries have grown. Note that prior to the focus on legal cannabis, the firm was called Tierra XP Latin America Real Estate ETF with a ticker symbol of LARE.
Prior to the surge in the popularity of cannabis, and the potential for major returns in this area, ETFMG Alternative Harvest ETF actually focused on real estate investing within the Latin American market. With legal marijuana making a significant contribution to the North American contribution now, ETFMG has been diversifying with investments in that sector. This has caused concern that shifting legalities could make management of the ETF problematic.
The only marijuana fund in the US, ETFMG Alternative Harvest ETF, now faces closure. The ETF’s custodian, Bancorp, is reportedly concerned about legalities, and is considering dropping the fund completely. While that might make the road bumpy for investors, the overall risk is not that high. Bancorp can be replaced relatively easily with another custody service provider, given the fact that other marijuana ETFs exist and thrive in the global economy. It only remains to be seen which custodian firm would step in to fill Bancorp’s shoes.
Note that ETFMG recently announced a minor change to the fund’s ETF ticker. Originally MJX, the fund will now trade as MJ. The change was made effective Friday, February 9, 2018. Note that the fund’s website has also changed its name to reflect the new ticker symbol and a different name, now ETFMG Alternative Harvest ETF. The website shows the full name, as well as “MJ” and a separate “etfmg®” at the upper right. Rebranding with the full name has already occurred throughout the fund’s website.