MSOS: 3rd Quarter 2026 Portfolio Review
Portfolio
After a strong second quarter, the AdvisorShares Pure US Cannabis ETF (MSOS) pulled back in the third quarter of 2026 as the market awaited the outcome of the DEA’s rescheduling hearing. MSOS returned -10.68% (NAV) / -10.85% (market) for the quarter ended September 30, 2026. By comparison, the North American Marijuana Index returned -0.26% and the S&P 500 Index returned +2.30% over the same period.
The quarter’s decline reflected a pause in the sector’s post-rescheduling momentum. With the DEA’s broader rescheduling hearing concluded in mid-July and a recommended decision expected, the market spent much of the quarter waiting. Sentiment weakened further at quarter-end, when the administrative law judge stayed the proceeding at the request of rescheduling opponents, delaying the decision.
Portfolio
MSOS maintained its concentrated approach during the quarter, remaining primarily invested in the largest multi-state operators (MSOs).
Top 5 MSO portfolio allocations by quarter:
- Q4 2025: 81.56%
- Q1 2026: 82.30%
- Q2 2026: 88.30%
- Q3 2026: 89.00%
This concentration reflects our continued emphasis on operators with the deepest state footprints, the most established brands, and the balance sheet capacity to benefit first from 280E relief and improving access to U.S. capital markets.
Positions
We initiated a small new position in Leef Brands Inc. (LEEEF). C21 Investments Inc. (CXXIF) exited the portfolio during the quarter in connection with its acquisition by Vireo Growth Inc. (VREOF), and the fund’s Vireo position increased accordingly. Otherwise, we made modest adjustments to existing holdings, trimming several positions as we managed weights within the portfolio’s concentrated structure.
Capital markets access continued to improve during the quarter, building on Trulieve’s milestone in June when it became the first U.S. multi-state operator to list on a major U.S. exchange. Glass House Brands followed at the end of June by also listing on the NYSE. Investors should keep in mind that this path is currently open only to medical operations. Because adult-use cannabis remains a Schedule I substance, operators seeking a listing would need to separate their state-licensed medical businesses from their adult-use businesses, register the medical side with the DEA, and demonstrate compliance with federal law.
Nasdaq formalized this approach during the quarter with a rule allowing DEA-registered medical cannabis companies to list, supported by an opinion of qualified counsel.⁴ In expectation of a DEA rescheduling of adult-use cannabis, Curaleaf and Green Thumb both applied for DEA registration of their medical operations within the expedited window, and TerrAscend held a special shareholder meeting on August 24 to prepare for a U.S. exchange listing.⁵ We expect more uplistings as DEA registrations are approved and or a favorable ruling is announced by the administrative law judge concerning adult use.
Winners and Losers
The third quarter of 2026 was mixed for the MSOS portfolio. Most holdings declined as the sector consolidated its second-quarter gains and awaited the outcome of the adult-use hearing.
A few positions held up well and finished the quarter higher. These included:
- Trulieve Cannabis Corp. (TRLV): +10.89%
- Village Farms International (VFF): +45.50%
Conversely, the following holdings weighed most heavily on performance:
- Curaleaf Holdings Inc. (CURLF): -5.09%
- Green Thumb Industries (GTBIF): -15.93%
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| TRLV | TRULIEVE CANNABIS CORP | 31.98% |
| CURLF | CURALEAF HOLDINGS INC | 30.65% |
| GTBIF | GREEN THUMB INDUSTRIES | 15.97% |
| VRNO | VERANO HOLDINGS CORP | 5.66% |
| GLAS | GLASS HOUSE BRANDS INC | 4.73% |
| CRLBF | CRESCO LABS INC | 3.79% |
| TSNDF | TERRASCEND CORP | 3.52% |
| JUSHF | JUSHI HOLDINGS INC | 1.99% |
| VREOF | VIREO GROWTH INC | 1.42% |
| AAWH | ASCEND WELLNESS HOLDINGS | 0.47% |
As of 09.30.2026. 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
Outlook
The stay in the DEA hearing slows the timeline, but in our view it does not change the direction of federal cannabis policy. We remain constructive on U.S. cannabis heading into the final quarter of the year. The quarter’s pullback reflected timing and process, not a reversal of the policy direction set in April. Medical cannabis is already in Schedule III, the government has asked the ALJ to recommend extending that treatment to the broader market, and the path to U.S. exchange listings is now open for operators that complete DEA registration.
Several catalysts could arrive before year-end: a ruling on the motion to stay and, ultimately, the ALJ’s recommended decision; DEA registration approvals and the uplistings they could enable; formal Treasury guidance on 280E; and the December 11 hemp deadline. Volatility is likely to persist as the market reacts to each of these, and further procedural delays are possible.
We continue to believe the largest, best-capitalized multi-state operators are best positioned to benefit as 280E relief flows through their financials, as access to U.S. capital markets widens, and as the industry consolidates around scale. Our concentrated approach continues to reflect that view.
Sources:
1. Morgan Lewis. High Time for a Change? Post–DEA Hearing, Broader Marijuana Rescheduling Questions Remain. September 24, 2026.
2. Vicente LLP. DEA Judge Pauses Marijuana Rescheduling Hearing Over New GAO Report. September 30, 2026.
3. Epstein Becker Green, Budding Trends. Hurry Up and Wait: DEA’s Rescheduling Hearing Hits the Brakes Over Its Own Alleged Process Gaps. 2026.
4. SHF Holdings, Inc. Form 10-Q for the quarter ended June 30, 2026 (describing Nasdaq rule 1877). SEC EDGAR.
5. TerrAscend Corp. Form 8-K: TerrAscend Files Preliminary Proxy Statement for Special Meeting of Shareholders in Preparation for Uplisting to US Exchange. June 29, 2026. SEC EDGAR.
6. Vireo Growth Inc. Form 8-K: Second Quarter 2026 Results. August 11, 2026. SEC EDGAR.
7. Foley Hoag LLP. A Temporary Reprieve for Hemp-THC Products… But What Now? September 2026.
8. The Marijuana Herald. IRS and Department of Treasury Make Section 280E Marijuana Tax Guidance an Official Federal Priority for 2026–27. October 2026.
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Cheers,
Past Commentary
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.