In a recent Form 13F filed with the U.S. Securities and Exchange Commission, New York City-based bulge bracket mega-bank Goldman Sachs Group Inc. (NYSE:GS) disclosed that it scooped up stake a stake in the $1.2 billion cannabis-focused ETFMG Alternative Harvest ETF (NYSE:MJ) in the most recent quarter.
While investment banks like Canaccord Genuity and Cowen have been deeply involved in the cannabis industry since its early days of legality, many firms like Goldman Sachs have been hesitant to dive in due to the federal illegality of marijuana in the United States.
Goldman No Longer Anti-Ganja?
This marks a huge turning point in sentiment towards the marijuana sector for Goldman.
Prior to this, the closest the bank has come to the industry was advising Constellation Brands, Inc. (NYSE:STZ) (NYSE:STZB) on its multi-billion dollar strategic investment in Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) in August 2018 and its participation in the $350 million raise for GW Pharmaceuticals plc (NASDAQ:GWPH) in October 2018.
Even as recently as February of this year, Goldman Sachs’ lead beverages and tobacco analyst Judy Hong wasn’t able to perform cannabis-related investment research on KushCo Holdings Inc. (OTC:KSHB) due to the firm’s firewall restrictions.
Now, with its $1.68 million toe-dip into the cannabis waters, it seems like the 150-year old firm may finally be changing its tune. With a stake in MJ, that means exposure to a long list of underlying cannabis stocks including Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON), Tilray Inc. (NASDAQ:TLRY), and more.
Goldman Scoops Up Some MJ
With an estimated over $330 billion in managed securities under management as of the recent filing, Goldman Sachs Group Inc.’s recent purchase of 51,536 shares of MJ amounts to just a drop in the bucket for the Goliath. That being said, it is always a bullish signal that institutions like Goldman Sachs are getting involved in cannabis investments.
According to Bloomberg, “The Investment Management segment offers investment management services; and wealth advisory services consisting of portfolio management, financial planning and counseling, and brokerage and other transaction services. The company serves corporations, financial institutions, governments, and individuals.”
Now, it seems as if those corporations, financial institutions, governments, and individuals can finally access the cannabis-related investments that have largely outperformed the S&P 500 this year. Since January 1st, the ETFMG Alternative Harvest ETF is up over 30%, compared with just over 10% gains for holders of SPY.
It should be noted that Canopy Growth, GW Pharma, and all of the underlying holdings of the ETFMG Alternative Harvest ETF operate in full federal compliance within their respective jurisdictions. It’ll be a long time before we see Goldman getting involved with multi-state U.S. operators like Acreage Holdings, Inc. (CSE:ACRG) (OTC:ACRGF), as their businesses are still illegal according to the Feds.
We’ll continue to monitor 13F filings to see what institutional investors are up to. In the meantime, be sure to subscribe to updates here so you never miss an important update.
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