A proposed constitutional amendment regarding recreational marijuana is being considered by the Florida Supreme Court.
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A major cannabis industry exchange-traded fund (ETF) is winding down as investors lose interest in the legally restricted industry.
AdvisorShares, the largest cannabis fund manager, announced that its Poseidon Dynamic Cannabis ETF will have its last day of trading on August 25th. The fund plans to liquidate assets and make payments to shareholders on September 1, according to a notice on its website.
The fund, led by sibling founders Emily and Morgan Paxia, was launched on the New York Stock Exchange in November 2021 during the pandemic-era cannabis sales boom.
The closures come as investors lose interest in the semi-legal cannabis industry, which is struggling to scale. Wholesale prices have fallen, and Congress has not changed federal laws that have hindered the industry's growth.
Co-founder Morgan Paxia said in an emailed statement to CNBC that the fund is responding to “the dramatic changes in investor sentiment that have impacted the broader macroeconomic environment and, more specifically, the cannabis industry.” “This does not mean that they will not be affected by changes,” he said.
Although nearly half of U.S. states have legalized adult recreational use of marijuana, it remains illegal at the federal level. Its classification as a Schedule I substance, along with heroin and LSD, has barred the sector from accessing most banking services and trading across state lines, causing an oversupply of cannabis and falling prices in many states. There is.
As stock prices fell, investors left the industry and capital dried up.
Poseidon Investment Management, founded in 2013 as one of the first cannabis-focused hedge funds in the U.S., has seen the value of its ETFs decline about 74% since its inception, compared to a 1.7% decline in the S&P 500 index. .
Its value has fallen 65% in the last year and was trading for less than $1 on Tuesday. Meanwhile, another industry fund by AdvisorShares, the Pure US Cannabis ETF, plunged about 60% over the same period.
Poseidon is the latest casualty in an industry strained by market forces and economic policy.
Last month, a $2 billion planned merger between multi-state cannabis operator Cresco Labs and Columbia Care fell through, more than a year after the companies announced the deal. In a move that further distances the cannabis industry from big banks, Mastercard announced last month that it would no longer allow cannabis transactions on federally compliant debit cards.
