A rotation into cannabis stocks by retail investors has a lot more room to run as the latest meme-stock rally fades, research firm says

Tilray cannabis marijuana
A worker smiles as she shows cannabis plants at the Tilray factory.

  • Cannabis stocks may be the next area of attention for retail investors as a recent rally in meme stocks fizzles, says Vanda Research.
  • Inflows for Tilray and Sundial Growers have picked up this week.
  • “Retail purchases of meme stocks probably peaked on Wednesday,” said Vanda.
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The meme-stocks rally that’s propelled AMC Entertainment up more than 2,200% so far this year is showing signs of exhaustion, but a recent pickup in buying of cannabis stocks including Tilray suggests that space could be the next center of attention for retail investors, according to a research firm.

“Retail purchases of meme stocks probably peaked on Wednesday,” said Vanda Research on Friday, noting a slowdown in net inflows into shares of AMC, the top recipient of retail investment money in recent weeks. Its rally has carried through to GameStop, BlackBerry and other stocks favored by retail investors active on social media such as Reddit’s Wall Street Bets platform. Vanda monitors retail trading activity in more than 9,000 US stocks and ETFs.

Meanwhile, inflows of $28.6 million into shares of cannabis companies Tilray and Sundial Growers on Thursday were the strongest since earlier rallies in the first quarter of the year. That marked the first clear signs of a rotation out of meme stocks, said Vanda. There was also a significant pick-up in retail flow on Friday for Tilray, Sundial and Cronos, three of the largest cannabis stocks traded in the US.

Meme stocks bounced back into the spotlight for retail investors in late May as bitcoin and other cryptocurrencies were crashing. AMC shares began to surge after major shareholder Dalian Wanda Group sold almost all of its remaining stake in the company. Redditors cheered the newly available shares and flexed their newfound weight in the market.

While meme stocks are still heftier in value than weeks before, the rally was starting to fizzle with AMC shares pulling back. AMC on Wednesday had $66 million in new inflows, less than half of the $136 million mln it had averaged in the previous two sessions, said Vanda. BlackBerry picked up some of the slack by drawing in $110 million for its largest day of retail buying in 2021.

However, “as opposed to BlackBerry, we think the rotation into cannabis stocks has a lot more room to run,” said Vanda, adding that Sundial and Tilray were the fourth and seventh-most active tickers on WallStreetBets forums on Thursday.

Tilray and Sundial jumped during the week after Amazon said its public policy team will back the Marijuana Opportunity Reinvestment and Expungement Act of 2021. The MORE act would, among other actions, end criminal penalties for anyone who sells cannabis in states where it’s legal.

“Despite the low chances that the Act is passed in the Senate (due to the filibuster), increasing media coverage is likely to attract the attention of the average retail investor,” said Ben Onatibia, a senior strategist at Vanda.

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The first US cannabis ETF surpassed $1 billion in AUM in its first 6 months of trading

Cannabis marijuana pruned
Cannabis plants are pruned at a grow facility in Oregon


The AdvisorShares Pure US Cannabis ETF has surpassed $1 billion in assets under management, according to a company statement released Tuesday.

The ETF, which trades under the ticker MSOS, launched on September 2, 2020 and has grown from $2.5 million in assets to now $1 billion in just six months. The fund has returned 110% since its inception and 37% in 2021 alone.

The AdvisorShares ETF was the first US exchange traded fund to focus solely on American cannabis companies and multi-state operations (MSOs), or companies directly involved in the legal production and distribution of cannabis. 

The fund’s inflows are a sign of growing investor interest in the cannabis space amid speculation that the Biden administration will keep its campaign promises and decriminalize marijuana. Some Democrats in Congress have pushed even further, advocating for the full legalization of cannabis in the US. 

“There’s a lot of excitement surrounding the cannabis investment space right now and for a variety of reasons,” said Dan Ahrens, AdvisorShares’ chief operating officer and portfolio manager of MSOS. “We firmly believe that the U.S. cannabis market provides a compelling long-term investment opportunity that clearly differentiates itself from other areas of the globe.” 

Other cannabis ETFs have also  performed well in 2021. Even after shedding gains from earlier this month, the ETFMG Alternative Harvest ETF is up 63% year-to-date, while the Amplify Seymour Cannabis ETF is up 81% year-to-date.

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