MSOS: 4th Quarter 2024 Portfolio Review
Portfolio
PERFORMANCE
MSOS faced a challenging fourth quarter in 2024, with its net asset value (NAV) falling -46.52% (NAV) and -47.07% (market). This decline contributed to a full-year loss of -45.36% (NAV) and -45.55% (market), reflecting the broader struggles within the U.S. cannabis market.
PORTFOLIO
Throughout 2024, MSOS maintained a strong emphasis on its top multi-state operators (MSOs), with the fund’s five largest holdings consistently accounting for over 80% of the portfolio:
- Q1 2024: 83.11%
- Q2 2024: 83.53%
- Q3 2024: 82.86%
- Q4 2024: 84.46%
This focused investment strategy underscores confidence in the largest cannabis operators, despite significant volatility in the sector.
POSITIONS
No new positions were added or removed during Q4; instead, the fund continued to optimize weightings to navigate the shifting market landscape.
On December 19, 2024, Cansortium Inc. (TIUM.U) completed its merger with RIV Capital Inc. (RIV). As part of the deal, RIV Capital shareholders received 1.245 shares of Cansortium per RIV share held. This transaction expands Cansortium’s retail footprint in New York’s growing adult-use market, bolstered by RIV’s Etain brand, which it acquired in 2022.
WINNERS & LOSERS
While the overall portfolio struggled, Vireo Growth Inc. (VREOF) emerged as the sole bright spot, gaining 20.48%. However, most other holdings experienced steep declines:
- Trulieve Cannabis Corp. (TCNNF): -56.80%
- Curaleaf Holdings Inc. (CRLBF): -47.47%
- Verano Holdings (VRNOF): -62.39%
These losses reflect the challenging operating environment for U.S. cannabis companies, particularly as regulatory uncertainty continues to weigh on investor sentiment.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| GTBIF | GREEN THUMB INDUSTRIES SWAP | 32.26% |
| TCNNF | TRULIEVE CANNABIS SWAP | 17.20% |
| CURLF | CURALEAF HOLDINGS INC SWAP | 11.79% |
| VRNOF | VERANO HOLDINGS CORP SWAP | 7.06% |
| CRLBF | CRESCO LABS INC SWAP | 5.83% |
| GLASF | GLASS HOUSE BRANDS SWAP | 4.33% |
| GTBIF | GREEN THUMB INDUSTRIES SWAP | 4.09% |
| CURLF | CURALEAF HOLDINGS INC | 3.53% |
| TSNDF | TERRASCEND CORP | 3.39% |
| TCNNF | TRULIEVE CANNABIS SWAP | 2.28% |
As of 12.31.2024. Cash is not included. Holdings 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 U.S. cannabis industry faced several major setbacks in Q4, with political and regulatory hurdles hindering progress:
- Florida’s “Yes on 3” ballot initiative failed, preventing the launch of a massive adult-use market.
- North and South Dakota voters rejected cannabis legalization measures.
- The Biden administration failed to deliver on its cannabis reform promises before the end of the term.
- The highly anticipated DEA rescheduling hearing was postponed, prolonging regulatory uncertainty.
Despite the legal challenges, there have been developments within the industry. The delay of the DEA’s hearing on cannabis rescheduling has sparked significant controversy. Originally set for January 21, 2025, the hearing was postponed by DEA Administrative Law Judge John Mulrooney, pushing the process back by at least three months. This decision follows legal challenges from industry groups and reform advocates, including: Village Farms International, Veteran organization Hemp for Victory, and The Office of the Cannabis Ombudsman (OCO). These groups accuse the DEA of colluding with prohibitionist organizations, unfairly selecting witnesses against rescheduling, and engaging in backdoor communication to obstruct cannabis reform. The accusations have fueled concerns that the DEA may be actively undermining its own proposed reclassification efforts.
In response to these delays and ongoing regulatory resistance, the cannabis industry is ramping up its lobbying efforts. Leading U.S. cannabis companies—including Cresco Labs, Trulieve, and Green Thumb Industries—have united to form the U.S. Cannabis Roundtable. This new coalition merges the U.S. Cannabis Council and the National Cannabis Roundtable, creating a stronger, more coordinated voice for federal reform.
While GOP resistance to cannabis reform remains, there are growing signs of bipartisan support within the new Trump Administration. Elon Musk, Joe Rogan, and Robert F. Kennedy Jr. have publicly voiced support for cannabis legalization. Some Republican lawmakers are signaling openness to rescheduling, banking reform, and federal policy changes. Donald Trump’s Administrations official stance on cannabis remains uncertain, but he has previously expressed support for rescheduling, safe banking reforms, and adult-use legalization in Florida.
Despite the regulatory gridlock and market volatility, the long-term trajectory for U.S. cannabis remains promising. Public support for legalization continues to grow, and the industry’s lobbying efforts are becoming more unified. While the pace of reform may be slower than expected, the industry is well-positioned for future breakthroughs, particularly if rescheduling efforts succeed and key state markets, like Florida, revisit legalization initiatives. As we move into 2025, all eyes will be on federal policy shifts, state-level initiatives, and how companies adapt to the evolving regulatory environment.
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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,Past Commentary
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus or summary prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
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.