Trading of European Cannabis ETF Discontinued
The Rize Medical Cannabis and Life Sciences UCITS ETF (FLWR), a cannabis exchange-traded fund developed by London-based Rize ETF, has ceased trading in Europe. Launched in 2020, FLWR was designed to invest in the medical cannabis sector, including shares of biotechnology, pharmaceutical, and agricultural companies that produce cannabis-based medicines or collaborate with their manufacturers.
Among the companies included in the fund is Jazz Pharmaceuticals, which owns GW Pharmaceuticals. GW Pharmaceuticals is known for developing two of the most in-demand cannabinoid-based drugs: Epidiolex, used to treat epilepsy, and Sativex, used for muscle spasms in multiple sclerosis patients.
Low Investor Interest and Financial Losses
In September of this year, investment firm Ark Invest acquired Rize ETF for £5.25 million (approximately $6.6 million) and decided to close FLWR along with three other ETFs whose capitalization did not exceed $50 million. Currently, the assets held in FLWR amount to just $13.9 million, with trading volumes in the thousands of dollars.
The lack of demand for FLWR is attributed to the fact that investments in this instrument have resulted in losses. Since its launch, the value of FLWR has dropped by 60% due to the declining share prices of its constituent companies. As a result, Ark Invest will discontinue trading of the ETF on December 12.
Medical Cannabis Investors Lose Half Their Capital
In October, UK financial services provider HANetf also decided to close its Medical Cannabis and Wellness UCITS ETF (CBDX), which allowed investments in the medical cannabis industry. The company merged this ETF with another fund, the Indxx Healthcare Megatrend Equal-Weight UCITS ETF (WELL).
HANetf representatives acknowledged that clients are no longer interested in CBDX, and the fund’s market capitalization is estimated at $10 million. Over the past two years, the value of CBDX has dropped more than fivefold, and in 2023 alone, investors lost nearly 50% of their capital. Due to low liquidity, CBDX was liquidated, and trading in this investment instrument ended on October 4. HANetf experts remain skeptical that the negative trend in cannabis company stocks will reverse in the medium term.