In the last few years, we have seen how cannabis legalization has proliferated worldwide, and it has become a sector with immense potential that has attracted the interest of many institutional and retail investors. Currently, Mexico is projected to be the largest country in the world by population to move forward with the legalization of cannabis. As Forbes suggests (https://bit.ly/2JsEwMC): “Mexico will boast the biggest consumer market for cannabis products — with a population of more than 125 million people — representing an enormous leap forward for the developing international cannabis marketplace.”
Mexico’s new position on the legalization of cannabis raises the question of how this will affect its northern neighbor, the United States. It will be, as the article mentions, “sandwiched” between two countries where cannabis will be legalized. This raises more questions than answers, as the US does not have a nationwide policy, but rather individual states decide on legality.
At BITA, we are always exploring the investment landscape for sought after thematic exposures. Within our portfolio of thematic indices, we offer the BITA Global Cannabis Giants Index (BGCANG). This index captures the gross total return performance of the 20 largest publicly listed companies with direct revenue exposure to the cannabis industry. As of the end of November, the index had underperformed the SPY ETF by about 6.83%. With the latest developments in Mexico, 2021 will be an interesting year for the BGCANG index.
