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The U.S. Department of Justice has initiated the process to reclassify marijuana from a Schedule I drug to a Schedule III drug.
The reclassification of cannabis to Schedule III allows cannabis companies to deduct ordinary business expenses from their federal taxes, whereas previously they were taxed on gross profits.
The tax benefits from rescheduling cannabis apply only to the medical portion of a company's business; the recreational side must still pay taxes on gross profit.
The AdvisorShares Pure U.S. Cannabis ETF (MSOS) increased in value by approximately 44% in the past month.
The trading volume for the AdvisorShares Pure U.S. Cannabis ETF (MSOS) increased by approximately 56% in the past month.
The AdvisorShares Pure U.S. Cannabis ETF (MSOS) cannot hold U.S. cannabis stocks directly due to federal law and instead gains exposure through the use of swaps.
The AdvisorShares Pure U.S. Cannabis ETF (MSOS) was the first ETF to provide exposure to U.S. multi-state operators by using swaps.
The AdvisorShares Pure U.S. Cannabis ETF (MSOS) has approximately $1 billion in assets under management, making it the only cannabis ETF of its size.
Despite a recent gain of over 40%, the AdvisorShares Pure U.S. Cannabis ETF (MSOS) is still down approximately 88% from its peak value.
Investors shifted assets from the MJ ETF to the MSOS ETF because MSOS offered exposure to U.S. cannabis companies.
For U.S. cannabis companies, medical use constitutes approximately 25% of the market, while recreational adult use accounts for the remaining 75%.