MSOS: 1st Quarter 2024 Portfolio Review
Portfolio
For the three-month period encompassed by this commentary (January 1, 2024, through March 31, 2024), MSOS gained +42.74% based on net asset value (NAV).
The portfolio has consistently maintained a strong focus on its top holdings, particularly in the largest multi-state operators (MSOs). The focus has remained consistent, with the top five holdings now comprising 83.11% of Fund assets as of March 31, 2024. Previously, the top five accounted for 78.66% of the portfolio at the end of the 1st quarter in 2023 and increased to 82.53% by the end of the 2nd quarter. Top five concentration was 82.07% at the end of 2023.
New Positions
During the quarter first quarter of 2024, Ascend Wellness Holdings (AAWH) was added to the portfolio, acquiring 1,889,634 shares. We made other only minor adjustments to weightings to effectively manage the portfolio. No positions were fully removed from the portfolio this quarter.
Winners and Losers
During this 1st quarter, Green Thumb Industries (GTBIF) gained +34.20%, while Curaleaf Holdings Inc. (CURLF) experienced a rise of +33.17%. Trulieve Cannabis (TCNNF) had a notable surge of +140.49%. However, there were some underperformers this quarter. Small holdings Lowell Farms Inc. (LOWLF) declined by -37.50%, and RIV Capital Inc. (RIV) experienced a decrease of -18.18%. The Fund’s 10th largest holding, Cannabist Company Holdings Inc. (CBSTF), was down -16.88%.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| GTBIF | GREEN THUMB INDUSTRIES SWAP | 25.52% |
| CURLF | CURALEAF HOLDINGS INC SWAP | 19.48% |
| TCNNF | TRULIEVE CANNABIS SWAP | 18.43% |
| VRNOF | VERANO HOLDINGS CORP SWAP | 13.96% |
| CRLBF | CRESCO LABS INC SWAP | 5.72% |
| TSNDF | TERRASCEND CORP | 5.56% |
| GLASF | GLASS HOUSE BRANDS SWAP | 2.96% |
| AYRWF | AYR WELLNESS INC SWAP | 2.58% |
| JUSHF | JUSHI HOLDINGS INC SWAP | 1.36% |
| CBSTF | CANNABIST COMPANY HOLDINGS INC SWAP | 1.24% |
As of 3.31.2024. Cash is not included. Subject to change.
Please see our complete Fund holdings at advisorshares.com/etfs/msos. The holdings details are updated each market day.
Cannabis Landscape
The potential rescheduling of marijuana by the Federal Government could trigger a series of changes at the state level, according to experts. There are indications that the administration is considering moving cannabis from Schedule I to Schedule III of the Controlled Substance Act (CSA), a shift that would reduce the tax burden on businesses selling it in legalized states and potentially alter how law enforcement agencies approach cannabis laws. However, some advocates argue this wouldn’t resolve conflicts between state and federal laws.
If cannabis were rescheduled to Schedule III, it would impact states with “trigger laws,” automatically prompting many states to alter cannabis regulation. In states like Idaho where cannabis is entirely illegal, rescheduling could pave the way for medical cannabis. States without automatic rescheduling processes would need further action from their legislatures or governing bodies.
On January 1, 2024, several new cannabis laws took effect in various states:
- California now prohibits employers from asking job applicants about past cannabis use and penalizing employees for lawful cannabis use outside of work.
- In Washington State, a new law protects workers from employment discrimination based on lawful cannabis use during the hiring process.
- Nevada’s adult cannabis possession limit increased to 2.5 ounces.
- Virginia transferred regulatory oversight of its medical cannabis program to the Virginia Cannabis Control Authority.
- Colorado now requires cannabis products to feature “use-by” dates, indicating optimal consumption within nine months of packaging.
- Oklahoma’s Oklahoma Medical Marijuana Authority (OMMA) can now hire “secret shoppers” for regulatory oversight and licensed marijuana labs can validate their testing process.
Looking ahead, 2024 may see further drug policy reforms with cannabis efforts advancing through ballot initiatives and legislative actions nationwide.
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To get updates on the funds, tune in to AdvisorShares’ AlphaNooner Show streaming live each regular weekday starting at 12:00 pm (East Coast time), where I am a guest almost every Tuesday. Other important guests from the cannabis world often join too. Find it on most major social media platforms or visit our the AdvisorShares “Events” webpage for more information.
Cheers,
The Fund is subject to a number of risks that may affect the value of its shares. This section provides additional information about the Fund’s principal risks. The degree to which a risk applies to the Fund varies according to its investment allocation. Each investor should review the complete description of the principal risks before investing in the Fund. As with investing in other securities whose prices increase and decrease in market value, you may lose money by investing in the Fund.
Cannabis-Related Company Risk. Cannabis-related companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may (i) significantly affect a cannabis-related company’s ability to secure financing, (ii) impact the market for marijuana industry sales and services, and (iii) set limitations on marijuana use, production, transportation, and storage. Cannabis-related companies may also be required to secure permits and authorizations from government agencies to cultivate or research marijuana. In addition, cannabis-related companies are subject to the risks associated with the greater agricultural industry, including changes to or trends that affect commodity prices, labor costs, weather conditions, and laws and regulations related to environmental protection, health and safety. Cannabis-related companies may also be subject to risks associated with the biotechnology and pharmaceutical industries. These risks include increased government regulation, the use and enforcement of intellectual property rights and patents, technological change and obsolescence, product liability lawsuits, and the risk that research and development may not necessarily lead to commercially successful products.
Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
Holdings and allocations are subject to risks and to change.
The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.