Amplify Alternative Harvest ETF

MJ

Market cap $129M

Amplify Alternative Harvest ETF is upgraded from Sell to Hold after a 33% decline, reflecting improved valuation but persistent sector risks. MJ's structure remains highly concentrated, with over half in CNBS and significant exposure to MSOs and Canadian LPs, driving volatility. Key upside catalysts include potential 280E tax elimination and Canadian cultivation tax reform, but regulatory uncertainty remains high.

Trump's executive order shifts cannabis from Schedule I to Schedule III, and launches a Medicare pilot program for CBD products. Brandon Gomez unpacks what's next, the hurdles ahead and what shifted the President's stance on the drug.

I recommend buying cannabis sector ETFs. Recent news suggests imminent U.S. regulatory easing, potentially reclassifying marijuana and unlocking significant sector value. Current MJ ETF price/sales is 1.5x; I conservatively project a move to 2.5x, implying 66% upside. Key risks include regulatory uncertainty, sector profitability challenges, and historical underperformance post-IPOs.

Cannabis stocks soared on Friday following news that U.S. president Donald Trump is expected to sign an executive order as soon as Monday that would ultimately ease federal restrictions on marijuana. The order would essentially reclassify marijuana from a Schedule I substance to Schedule III under the federal Controlled Substances Act.

Cannabis stocks jumped Friday as the White House moved to significantly ease federal restrictions on marijuana. Brandon Gomez has the latest on the timing of a potential Executive Order and why the industry says it's “more optimistic” this time around.

Amplify Alternative Harvest ETF has a history of underperformance and recent gains driven by speculative cannabis sector optimism. MJ's portfolio is concentrated in both U.S. MSOs and Canadian LPs, with heavy exposure to stocks currently rated Sell or Strong Sell. Despite recent outperformance versus peers, MJ's index construction and lack of ancillary exposure make it unattractive compared to alternatives like CNBS.

Amplify Alternative Harvest ETF is my top cannabis ETF pick due to its diversification and positive response to rescheduling headlines. I expect President Trump to leverage cannabis rescheduling for midterm election gains, which should boost MJ and other cannabis ETFs in the near term. MSOS is downgraded to sell due to high concentration risk, while CNBS is rated a hold because of its reliance on swaps and high expense ratio.

Cannabis ETF spent the first half of the year in the performance doldrums. But they have rallied of late on news that the Trump administration is open to reclassifying marijuana as a less dangerous drug.

Cannabis stocks and ETFs like Amplify Alternative Harvest ETF and AdvisorShares Pure US Cannabis ETF are surging on speculation that President Trump will reclassify marijuana as a Schedule III drug. Rescheduling would reduce regulatory and banking risks, potentially unlocking new capital and investor interest, but both ETFs carry high fees and concentration risks. MJ is preferred over MSOS for its greater diversification, though both face challenges from high expense ratios and reliance on swaps.

Cannabis stocks rallied on a Wall Street Journal report that President Donald Trump is contemplating reclassifying weed as having a lower danger level. Such a move would be "a gamechanger" for the industry, one investing chief said.