Audio - Amplify Seymour Cannabis ETF (CNBS)

4th Qtr Cannabis Investment Commentary

In this report we will outline the investment dynamics driving overall returns in this high growth emerging asset class, heading into the final quarter of 2019.

Cannabis Weekly Recap by Tim Seymour

Headlines (week ending 11/22/19)

  1. Overall Market: Possibly the most volatile week in this sector (that’s saying something); Canadian names over U.S. this week; company-specific layoffs/restructuring news, and earnings results from U.S. companies
  2. Macro/Legislative: House Judiciary Committee approval of MORE Act (federal decriminalization): sets the bar higher, but it doesn’t mean it changes the timeline aggressively; Ontario addresses store openings; setting the record straight on illicit markets
  3. CNBS ETF: Currently at 32 holdings; continued focus on stronger balance sheet companies (free cash flow)

From inside the cannabis industry, delivering active portfolio management in cannabis.

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV, and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

The Fund is subject to management risk because it is an actively managed. Companies involved in the cannabis industry face competition, may have limited access to the services of banks, may have substantial burdens on company resources due to litigation, complaints or enforcement actions, and are heavily dependent on receiving necessary permits and authorizations to engage in medical cannabis research or to otherwise cultivate, possess or distribute cannabis. The possession and use of cannabis, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Securities issued by non-U.S. companies present risks beyond those of securities of U.S. issuers.

Many of the companies in which the Fund will invest are engaged in other lines of business unrelated to cannabis and these lines of business could adversely affect their operating results. Cannabis is a Schedule I controlled substance under the Controlled Substances Act (“CSA”), meaning that it has a high potential for abuse, has no currently “accepted medical use” in the U.S., lacks accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the U.S. Small and/or mid-capitalization companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, products or financial resources, management inexperience and less publicly available information. The Fund is non-diversified, which can cause greater share price fluctuation.

Amplify Investments LLC is the Investment Adviser to the Fund, and Penserra Capital Management, LLC serves as the Investment Sub-Adviser.

Amplify ETFs are distributed by Foreside Fund Services, LLC.