MSOS: 3rd Quarter 2023 Portfolio Review
Performance
Positive developments occurred in the US cannabis space towards the end of Q3. For the three-month period that this commentary covers (July 1, 2023 through September 30, 2023) MSOS increased 44.60% (NAV).
Portfolio
The portfolio continues to maintain a high concentration in its top holdings of the largest multi-state operators (MSOs). This large concentration has generally continued as the top five holdings represented 78.66% of the portfolio at the end of the 1st quarter 2023, 82.53% of the portfolio at the end of the 2nd quarter 2023, and 76.36% of the portfolio at the end of the 3rd quarter 2023.
New Positions
There were no new additions for this quarter, but we continued to shift and adjust weightings to manage the portfolio. Several positions were removed from the portfolio including Urban-Gro Inc. (URGO), AFC Gamma Inc. (AFCG), and GrowGeneration Corp. (GRWG).
Winners and Losers
Truelieve Cannabis (TCNNF) was up 44.31% for the quarter, Verano Holdings (VRNOF) was up 42.19% for the quarter, AYR Wellness Inc. (AYRWF) was up 147.53% for the quarter, and Columbia Care Inc. (CBSTF) was up 102.25% for the quarter. The laggers this quarter were Lowell Farms Inc. (LOWLD) down 33.30%, Power REIT (PW) down 27.95%, and Gold Flora Corp. (GRAM) down 20.00% for the quarter.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| GTBIF | GREEN THUMB INDUSTRIES SWAP REC | 23.62% |
| CURLF | CURALEAF HOLDINGS INC SWAP REC | 18.35% |
| VRNOF | VERANO HOLDINGS CORP SWAP REC | 11.72% |
| TCNNF | TRULIEVE CANNABIS SWAP REC | 10.62% |
| CRLBF | CRESCO LABS INC SWAP REC | 6.33% |
| TSNDF | TERRASCEND CORP | 4.99% |
| CBSTF | COLUMBIA CARE INC SWAP REC | 3.77% |
| AYRWF | AYR WELLNESS INC REC | 2.36% |
| TSNDF | TERRASCEND CORP SWAP REC | 2.19% |
| JUSHF | JUSHI HOLDINGS INC SWAP REC | 2.18% |
As of 09/30/2023. 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.
Market Update
On September 27th, the Senate Banking Committee gave approval to a bipartisan marijuana banking bill with amendments, which will advance it to the floor. The Secure and Fair Enforcement Regulation (SAFER) Banking Act, sponsored by Senators Jeff Merkley (Dem-OR) and Steve Daines (Rep-MT), received a 14-9 vote. While members were expected to discuss several more amendments related to issues like cannabis industry access to stock exchanges and banking regulations to prevent discriminatory enforcement, these matters were not addressed during the meeting.
We still need clarity on the DEA’s possible rescheduling of cannabis and the potential issuance of a “Garland Memo” from the U.S. Attorney General. These are moving parts of an expected and coordinated partial legalization of cannabis that need to be put in place. While we believe we’re moving in the right direction, there’s still a considerable distance ahead of us.
We believe each progressive step has the potential to be a positive leg-up for cannabis stocks. We think many cannabis investors are still in a wait and see mode before they truly believe Federal reform is really happening, having already witnessed many politician’s failed promises.
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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,Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the 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.