New marijuana ETF hits the market based on rescheduling hopes

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A new cannabis exchange traded fund (ETF) has been launched by Subversive Capital Advisor based on the potential rescheduling of marijuana by the U.S. government.

The ETF launch comes after a run-up in cannabis stocks following news of a recommendation from U.S. Department of Health and Human Services (HHS) officials that marijuana be reclassified as a Schedule 3 substance, a change that would be broadly positive for the legal marijuana industry.

The Drug Enforcement Administration is now reviewing that recommendation, and there have been encouraging signs the DEA will heed the HHS recommendation.

The new Subversive Cannabis ETF invests “at least 80% of its net assets in securities of companies that are directly involved in the global cannabis sector, including but not limited to U.S. operating companies,” New York-based Subversive said in a news release.

The actively managed fund charges a 0.75% management fee.

“We do not believe a Congress this politically divided will meaningfully act on cannabis at the federal level,” fund manager Christian Cooper said in a statement.

“However, we do believe a regulatory move to a Schedule 3 status meaningfully changes the trajectory for this business in the United States without Congressional action,” he said.

“We further anticipate the DEA will accept and finalize this recommendation.”

The Subversive Cannabis ETF trades as LGLZ on the Cboe BZX Exchange.

Another cannabis ETF, the AdvisorShares Poseidon Dynamic Cannabis Exchange Traded Fund, shut down in August.