2022 cannabis trends to watch, how to invest: CNBS ETF’s Tim Seymour
Branding could be the central cannabis theme for 2022, says portfolio manager Tim Seymour.
After a disappointing 2021 on the legislative front, the big players will use this year to build their presence in existing cannabis markets and adjacent industries, Seymour told CNBC’s “ETF Edge” this week.
“As we look forward to 2022, one of the big themes for cannabis investors should be the emergence of brands,” said Seymour, who runs ETF Amplify Seymour Cannabis (CNBS).
Tilray CEO Irwin Simon told CNBC this week that his company will take a two-pronged business approach while the legislation is in play: focus on countries where the substance is federally legal and develop brands on cannabis-adjacent markets.
“What are you doing in the United States while you’re waiting for legalization? You’re creating brands and categories adjacent to the cannabis industry like the spirits business, like the beer business, like the food business and hemp,” Simon said in “Closing Bell.” .”
“At the end of the day, you’ll see a beer with THC. You’ll see a bourbon with THC. You’ll see edibles. And we have the brands…consumers will know.”
This targeted approach should help “insulate” publicly traded cannabis companies from margin pressures after a tough 2021 in which cannabis ETFs were down 20-40%, said Seymour, who is also Founder and Chief Investment Officer of Seymour Asset Management and CNBC contributor.
“If you think about sector valuations, we’re going into 2022 cheaper than 2021,” Seymour said. “It’s a sector that offers higher growth than many other sectors outside of cannabis at much lower valuations.”
It’s no surprise that Seymour’s favorite way to invest in the fast-moving space is through his actively managed exchange-traded fund, which he says provides the necessary diversification and agility.
“For investors who want exposure to this industry that changes day by day, in an active ETF strategy you have the ability to adapt quickly,” he said.
CNBS was the second-best performing cannabis ETF in 2021, just behind Cambria’s Cannabis ETF (TOKE), which is about a third of its size.
Seymour attributed his fund’s resilience to owning a global portfolio and an explosion in the cannabis debt markets which has allowed companies such as Green Thumb Industries to issue new types of debt instruments that can help hedge against downside during periods of volatility.