HANetf has announced a change to the composition of CBDX - The Medical Cannabis and Wellness Ucits ETF. The ETF was launched in January 2020 on XETRA and London Stock Exchange with Purpose Investments as sponsor.
The fund tracks a rules-based Medical Cannabis and Wellness Equity Index from Solactive, consisting of publicly listed companies conducting legal business activities across nine thematic sub-sectors in the medical cannabis, hemp and CBD industries. The methodology uses a rigorous and multi-tiered screening process to identify and exclude companies that are involved in the adult-use Cannabis market.
The ongoing quantitative and qualitative screening process has identified that Namaste Technologies no longer meets the strict criteria for inclusion following its announcement that Choklat an Alberta-based craft chocolate manufacturer and chocolatier in which Namaste holds a 49% equity position, has received a processing license from Health Canada to produce a line of cannabis-infused chocolate bars, drink mixes and infused sugar.
The sale of cannabis-infused edible products (which will be sold by their subsidiary starting March 2020) will generate revenue in the adult-use cannabis market, outside the scope of the index methodology and the removal of Namaste represents a proactive move to keep the index in line with the calculation methodology.
This deletion reinforces one of the major benefits of CBDX provides to European investors - comfort that the companies held in the index remain legal as evidenced by the removal of Namaste expediently via a screening process.
Some European jurisdictions do not allow recreational use of cannabis at this point in time. Hence these controls help the fund remain in compliance with its objective.