How to Invest in CANNX

Marijuana companies are working with recreational marijuana, medical marijuana, and associated products out there right now. Investments soared from $3.5 billion in 2017 to $13.85 billion in 2018 [1]. A lot of North American companies, whether based in Canada or the U.S., are making the jump to being publicly traded. If you are interested in making an investment of your own, you can begin investing with the Cannabis Growth Fund.

The Legal and Investment Environment for Cannabis Investing

With the increasing number of states that have legalized marijuana, businesses are rapidly expanding. It may take some time for this trend to be reflected in legislation at the federal level under which it is illegal. However, the reality in the stock exchanges cannot be ignored. Recreational and medical marijuana is becoming legal in more and more states. There has been a definite shift in public approval. It took less than twenty years for public opinion to radically flip. In 2000, 63% of Americans disagreed that marijuana should be legal. Now, 62% agree [2]. With this broad support, it seems inconceivable, in our view, that it will remain illegal in the remainder of the states for long. Especially when there is so much to be gained in terms of employment and taxation. More than six in ten Americans believe it should be legalized in some fashion. [2]. Majorities in every generation except the Silent Generation are in favor [2]. A staggering 74% of Millennials are in favor of legalization [2]. Gen Z, America’s most open-minded generation yet, is coming of age over the next decade. In our opinion, the effect their political heft and disposable income will have on the legal marijuana industry will be large. We also believe that early research points to them being even more receptive to legal marijuana than Millennials. As is often the case, it is the legislature that must catch up to public opinion.

Big-name entrepreneurs from Silicon Valley and Hollywood are certainly jumping on the investment wagon. PayPal co-founder Peter Thiel’s Founders Fund has made significant investments. Snoop Dogg is director of a venture capital fund which invests in cannabis startups. Richard Branson, Whoopi Goldberg, Woody Harrelson, Mike Tyson: the list of investors and entrepreneurs continues to grow.

Current Promising Sectors of the Cannabis Industry for Investment

Current Promising Sectors of the Cannabis Industry for Investment
Production and distribution of marijuana itself is the sector of the cannabis industry which attracts the most attention. However, there are numerous other aspects of the industry that have incredible promise for investors. For example, production of CBD medicinals. Cannabidiol, more commonly known as CBD, is a non-psychoactive cannabis extract. It can be taken orally, inhaled in smoke or vapor, or sprayed as an aerosol. The full extent of its effects are still being researched. What’s more, you can now order CBD edibles online. ‘CBD gummies’ was the third-most searched for food-related term on Google in the US for 2018 [3]. This does not mean that people are actually buying the gummies though. We believe that this sector of the industry has incredible promise for investors. In our opinion, its value will only grow as more applications of the extract are established through research.

At the end of 2018, the Farm Bill was signed into law, making the production of industrial hemp legal. We believe that this one change could do much to reverse the fortunes of struggling American farmers, as the dairy and tobacco industries sag. The hardy, robust crop is beneficial not only for its CBD uses, but its positive effect on the soil. Its fibers can be used in place of plastics, adding to its environmentally friendly credentials. It also has applications in insulation, textiles, and industrial products, even construction. We believe American hemp will slowly muscle out Chinese-produced hemp in the international market. Its higher quality and lack of exposure to heavy metals contaminants will, in our view, make it a more desirable product for producers. Currently, China is the world’s largest hemp producer, with over a third of the market [4]. Canada is the second-largest producer [5]. We believe that the hemp market is ready for a new large scale producer of quality industrial hemp for a range of purposes. As the raw material becomes more broadly available in the U.S., we expect that there will be enterprises founded to make use of its by-products. Colorado, to nobody’s surprise, has already stolen a march on the rest of the country in this regard. However, less immediately obvious is how many of Kentucky’s tobacco farmers are also taking advantage of this new opportunity.

How to Invest in CANNX

How to Invest in CANNX
Without federal tolerance of the industry, many marijuana companies are not able to trade on the NYSE or NASDAQ. Instead they have to trade on Canadian markets, notably the Toronto stock exchange. This is another reason to invest with a private, professionally-managed mutual fund. An active fund manager can help navigate the Fund’s investments. The portfolio managers seek to identify growth opportunities, while cushioning the fund from any volatility in the market.

[1] Cannabis Investments Nearly Quadrupled in 2018, Fortune, 12/20/18:

[2] About six-in-ten Americans support marijuana legalization, Pew Research Center, 10/8/18: https://www.pewresearch.org/fact-tank/2018/10/08/americans-support-marijuana-legalization/

[3] CBD-infused edible market projected to be $4.1 billion in 2019, Bloomberg, 4/23/19: https://www.bloomberg.com/press-releases/2019-04-23/cbd-infused-edible-market-projected-to-be-4-1-billion-in-2019

[4] China commands over one-third of the total global hemp market, Globe Newswire, 11/1/18: https://www.globenewswire.com/news-release/2018/11/01/1641275/0/en/China-Commands-Over-One-Third-of-the-Total-Global-Hemp-Market.html

[5] Top 6 Hemp Growing Countries: USA Now Ranks Number 3!, Ministry of Hemp, 4/22/19: https://ministryofhemp.com/blog/hemp-growing-countries/

Statements, estimates and forecasts are subject to significant legal, business, economic, and competitive uncertainties, including competition, limited access to bank services, litigation, enforcement actions, and the receipt of government authorizations. This includes differences in, among other things, laws, regulations and guidelines relating to the manufacture, transportation, and storage of cannabis, and the conduct of operations, which vary among the U.S. federal government, various states, and foreign jurisdictions. There can no assurance that such estimates and/or forecasts will be realized, and these are not indicative of future investment performance. Historical data is not indicative of future performance.

Investing involves risk, including possible loss of principal. The cannabis industry is subject to rapidly evolving laws, rules and regulations, and increasing competition which may cause such companies to change business model, shrink or suddenly close. Possession and use of cannabis is illegal under federal and certain states’ laws, which may negatively impact the value of Fund investments. Where legalized by states, cannabis possession and use remains a violation of federal law. Pronouncements from the current Administration suggest the Department of Justice may take action against states where marijuana use and possession is legal, step up the enforcement of federal marijuana laws and the prosecution of nonviolent federal drug crimes and potentially begin using federal funds to prevent states from implementing laws that authorize medical marijuana use, possession, distribution, and cultivation. Controlled substance legislation differs between countries, which may limit the ability of cannabis industry companies to sell their products. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Investments made in small, mid-capitalization and micro-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Purchasing and writing put and call options entails greater than ordinary investment risks. Options ownership involves the payment of premiums, which may negatively impact Fund performance. Please see the prospectus for details of these and other risks. Distributed by IMST Distributors, LLC.