Benzinga | Feb 26, 2021 10:12AM EST

Investors Have Been Flocking To This US Cannabis ETF

It only took six months for the newest cannabis ETF to reach $1 billion in assets.

On Tuesday, AdvisorShares announced its AdvisorShares Pure US Cannabis ETF (NYSE:MSOS) crossed the threshold, making it just the second cannabis ETF to reach the mark.

ETFMG Alternative Harvest ETF (NYSE:MJ) is the other.

MSOS made its debut on Sept. 2 with $2.5 million assets under management. It has since risen 93%.

Speaking at the Benzinga Cannabis Conference Thursday, AdvisorShares Managing Director and Chief Operating Officer Dan Ahrens said the fund's strong performance and growing popularity have been a direct result of its unique exposure to cannabis.

"The difference was active management, active stock selection, and U.S. exposure," he said. "All cannabis investing is not the same. In an actively managed fund, we can make choices any time we want or need. We want to have our hands on the steering wheel of these funds."

MSOS has options, Ahrens added, touting it as the only way to invest in a basket of U.S. multi-state operators.

Its top holdings include Green Thumb Industries Inc. (OTCQX:GTBIF), Trulieve Cannabis Corp. (OTCQX:TCNNF), Curaleaf Holdings Inc. (OTCQX:CURLF), and Cresco Labs Inc. (OTCQX:CRLBF). However, it should be noted that MSOS doesn't hold these shares directly. Instead, it owns total return swaps, which Ahrens said would be the case until the federal law changes and those companies are allowed to uplist to an exchange.

Ahrens also discussed the AdvisorShares Pure Cannabis ETF (NYSE:YOLO), which was the top-performing cannabis ETF in 2020.

"At the beginning of 2020, I started predicting there was going to be a separation between the companies with [strong] balance sheets and those companies that don't have balance sheets; companies with earnings and at least a strong path to profitability, and those that don't; and a choice between U.S. and Canada," he said. "We saw that in 2020."

YOLO's top holdings include Village Farms International (NASDAQ:VFF), GW Pharmaceuticals (NASDAQ:GWPH), and Aphria Inc. (NASDAQ:APHA).

"The U.S. opportunity is growing rapidly state by state," he said. "For the foreseeable future, the talk is about decriminalization, it's about 280E reform, it's about SAFE Banking, and it's about some form of state's rights approved at the federal level."