MSOS: 1st Quarter 2026 Portfolio Review

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. For the fund’s most recent standardized and month-end performance, please click www.advisorshares.com/etfs/msos.

Performance
The AdvisorShares Pure US Cannabis ETF (MSOS) had a difficult first quarter of 2026. MSOS returned -23.53% (NAV) / -24.47% (market) as of March 31, 2026. For comparison, the S&P 500 Index declined -4.33% over the same period.

Over the trailing one-year period ending March 31, 2026, MSOS returned +36.95% (NAV) / +36.54% (market).

The quarter’s decline reflected ongoing investor frustration with the slow pace of federal cannabis rescheduling. The process that began with President Trump’s executive order in December 2025 remained in progress, with no final rule in place by quarter-end. Optimism that had supported the sector in late 2025 cooled off as the market adjusted its expectations around timing.

Portfolio
MSOS kept its concentrated strategy in place during the quarter, staying primarily invested in the largest multi-state operators (MSOs). By the end of Q1 2026, the portfolio continued to reflect our conviction in the industry’s strongest operators.

Top 5 MSO portfolio allocations by quarter:

• Q2 2025: 84.04%
• Q3 2025: 80.38%
• Q4 2025: 81.56%
• Q1 2026: 82.30%

This concentration illustrates our purposeful emphasis on the entities with the most extensive operations, deep expertise, and presence in primary regional markets.

Positions
We did not add or remove any positions, but made modest adjustments to existing holdings to reflect current opportunities and anticipated policy shifts.

Separately, Cansortium Inc. (FNT) announced in early February that it is changing its corporate name to Fluent Corp. (CNTMF). The company will now trade under the new name and ticker on the OTC Markets and Canadian Securities Exchange to better align with its main consumer brand, Fluent™.

Winners and Losers
The first quarter of 2026 was a tough one for the cannabis sector, with every holding in the MSOS portfolio posting a decline.

A few positions held up relatively better and helped limit some of the downside. These included:

• Glass House Brands (GLASF): -9.03%
• Verano Holdings Corp. (VRNO): -15.27%

Conversely, the following holdings weighed most heavily on performance:

• Green Thumb Industries (GTBIF): -21.14%
• Trulieve Cannabis (TCNNF): -35.63%

Ticker	Security Description	Portfolio Weight %
CURLF	CURALEAF HOLDINGS INC	24.13%
GTBIF	GREEN THUMB INDUSTRIES	21.75%
TCNNF	TRULIEVE CANNABIS	20.90%
GLASF	GLASS HOUSE BRANDS	8.20%
VRNO	VERANO HOLDINGS CORP	7.32%
CRLBF	CRESCO LABS INC	6.43%
TSNDF	TERRASCEND CORP	5.58%
JUSHF	JUSHI HOLDINGS INC	2.45%
VFF	VILLAGE FARMS INTERNATIONAL	1.51%
CXXIF	C21 INVESTMENTS INC	0.67%

As of 03.31.2026. Cash is not included. Holdings are 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 first quarter of 2026 highlighted the difference between policy announcements and actual implementation in the cannabis sector. President Trump’s executive order from December 2025 directed the Attorney General to finalize rescheduling cannabis to Schedule III as quickly as possible. As of March 31, 2026, however, marijuana remained classified as a Schedule I controlled substance under federal law. ¹ The DEA’s rulemaking process, which includes public comments and administrative reviews, was still underway.

Much of the optimism from late 2025 had already been priced into the market. During Q1, that enthusiasm faded as investors adjusted to the slower-than-expected timeline for final approval.

If completed, moving cannabis to Schedule III would deliver meaningful relief by removing the Section 280E tax restrictions that currently weigh on multi-state operators, while also easing certain research limitations and bringing federal policy more in line with existing state medical cannabis programs.² That said, it would not address banking access or allow uplisting to major national exchanges like the NYSE or Nasdaq. Those steps would still require separate congressional action, and neither the SAFER Banking Act nor similar legislation saw meaningful progress during the quarter. Most large financial institutions continued to decline cannabis-related clients.

At the state level, regulated markets continued to mature. New York’s adult-use program was on track for an annualized run rate approaching $1 billion, while Ohio’s market generated steady revenue. In California, the decision to postpone the next excise tax increase until 2030 gave licensed operators some breathing room as they competed with a large illicit market.
Separately, late in the quarter CMS announced a new pilot program (set to begin April 1) that would allow participating providers to offer up to $500 per year in eligible hemp-derived products to certain Medicare beneficiaries. Congress had also passed legislation in late 2025 updating the definition of hemp based on total THC concentration. That change, effective November 2026, is expected to help level the playing field between licensed operators and the largely unregulated hemp-derived THC market. ³

Industry fundamentals remained challenging in several areas. Wholesale flower prices have continued to decline over the past several years, and outstanding tax liabilities across the sector remain substantial. At the same time, analysts are projecting modest revenue growth for multi-state operators in 2026, with potential M&A activity possibly picking up later in the year as balance sheets improve with the prospect of 280E relief. ⁴

Outlook

As we enter Q2 2026, the finalization of federal cannabis rescheduling continues to represent the sector’s most important near-term development. The DEA rulemaking process remains underway, and any updates from the agency or the DOJ will continue to draw close attention from investors.

While the timeline has taken longer than many had hoped, the underlying opportunity tied to Schedule III remains meaningful. Removing the Section 280E tax burden would provide important relief to the largest multi-state operators and help improve their financial flexibility. Longer-term steps such as banking reform and national exchange uplisting would require separate congressional action and are likely further out.

In the interim, we expect periods of volatility as the market reacts to news flows, or the lack of it. Even so, the leading, best-capitalized MSOs remain well positioned to navigate the current environment and benefit from further regulatory progress when it arrives. Our concentrated portfolio continues to reflect that conviction.

Sources:
1. The Cannabis Business Advisors. Federal Cannabis Update: Where Marijuana Rescheduling Stands in Early 2026. January 31st, 2026.
2. ArentFox Schiff. Executive Action Revives Federal Marijuana Rescheduling Efforts. December 29th, 2025.
3. Congress.gov. Legal Consequences of Rescheduling Marijuana. 2026.
4. Investing News Network. Cannabis Market Forecast: Top Trends for 2026. December 29th, 2025.

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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.