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Should You Buy the Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ)?

Are Marijuana ETFs safe?

Written by Jeff Siegel
Posted April 6, 2017 at 3:32PM

The Horizons Medical Marijuana Life Sciences ETF – the first cannabis ETF – started trading yesterday on the TSX.

I passed, but that’s really because I’m not a fan of ETFs, anyway.

However, for those considering this ETF, based on its holdings, it’s not that bad.

The fund contains all the major players, including: Canopy Growth Corporation (TSX: WEED), Aphria, Inc. (TSX: APH), OrganiGram Holdings (TSX-V: OGI), Emblem Corp. (TSX-V: EMC), Aurora Cannabis (TSX-V: ACB), and Emerald Health (TSX-V: EMH).

There are a couple I’m not particularly fond of, including Scott's Miracle Grow, which is not a valid cannabis play, and Insys Therapeutics, which spent a half million dollars to keep cannabis illegal while developing a synthetic cannabis drug that was recently approved by the FDA.

etfm

While I understand that Scott's Miracle-Gro does offer some stability for the ETF, I would’ve preferred to see a bit more exposure to Emblem Corp, or perhaps the inclusion of a few up-and-comers, like True Leaf Medicine (CSE: MJ) and Hydropothecary (TSX-V: THCX)

That being said, if you don’t want to invest in individual cannabis stocks, this isn’t a particularly horrible ETF. I certainly like it better than the AgroSphere cannabis ETF, which will also see a market debut shortly.

There are a few decent holdings in this one, but most I’ve seen are far too risky. An ETF should offer you a certain amount of safety. The AgroSphere doesn’t seem to accomplish that.

Given that this industry is still so young, I prefer to limit risk where possible, which is why our exposure to risk is limited.

Here’s a list of our top cannabis holdings …

  • Aphria, Inc. (TSX-V: APH)
  • Aurora Cannabis (TSX-V: ACB)
  • Emblem Corp. (TSX-V: EMC)
  • Emerald Health (TSX-V: EMH)
  • Innovative Industrial Properties (NYSE: IIPR)
  • OrganiGram (TSX-V: OGI)
  • Hydropothecary (TSX-V: THCX)
  • Canopy Growth Corporation (TSX: WEED)

Here’s what we’re buying today …

Emerald Health (TSX-V: EMH) – Buying below $1.45

And here’s what we’re watching …

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