Light Up: Cannabis Futures are Here!

Cannabis has been a hot topic in Chicago recently, with the new decade marking the first-time cannabis can be legally sold in Illinois. The result, nearly $40 million in legal pot sales in the first month of activity.  This on the heels of a hedge fund conference we attended late last year in which private equity funds focused on cannabis were a hot topic.

What’s all the fuss about? Money, of course. Governments like the dysfunctional one we have here in Illinois want new ways to get tax revenue so they don’t have to keep raising income and property taxes. They are in it for the money. The entrepreneurs see this as the next best thing since sliced bread (one of the winning Super Bowl commercials, in our view, by the way) and likewise there for the money. The private equity funds, stock exchanges, distribution networks, seed companies, lamp outfits – all of them are looking for a new source of revenue.

And all of them have a big problem…..how do you hedge your exposure to these new cannabis/pot focused companies? Enter the Montreal Exchange and the launch of their Cannabis Index Futures.

Due to new legislation surrounding legalization, and more and more groups going public by listing shares on the TSX and TSXV, the Canadian market has grown considerably.

Building on this success, the Montréal Exchange (MX) partnered with S&P to create a broad-based index which constituents are companies legally operating in their federal jurisdiction, the first of its kind.

The S&P/MX International Cannabis Index Futures (SMJ) is now available to investors in Canada, the U.S. and around the world to capture new investing opportunities in the cannabis industry.

While we would have preferred to see futures on the actual crop… (that has a whole host of issues related to grade and a proper deliverable), this likely serves a better economic purpose at this point for those looking to hedge and/or speculate on whether the Cannabis industry will flourish or flounder. It’s also got potential appeal to technical traders and speculators based on the index’s volatility, which is much higher than the e-mini or Nasdaq at this point.

Interested in learning about the new Cannabis Index Future on the MX? Check out this page to download their brochure, and contact us to learn more.

PS – we would have waited to launch the contract in April of 2020….you know, 4/20, for maximum marketing punch.

 

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

logo