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… 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.


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