Episode Summary
Executive Summary: The episode spotlights MSOS, the AdvisorShares Pure U.S. Cannabis ETF, as an “ETF of the moment” because it has surged alongside a U.S. cannabis policy shift: DOJ rescheduling marijuana from Schedule I to Schedule III. The hosts and guest discuss why the fund’s swap-based structure, U.S.-focused exposure, and strong recent trading volumes make it notable, while emphasizing that cannabis remains volatile, legally constrained, and still best treated as a small, speculative allocation.
Main Topics: MSOS as the ETF of the moment (Priority: 5/5): The show’s core thesis is that MSOS meets BI’s screen for an ETF gaining unusual short-term momentum in both price and volume, making it a standout theme ETF to watch. Cannabis rescheduling and policy catalyst (Priority: 5/5): The main driver of the recent rally is the Justice Department’s move to reschedule marijuana from Schedule I to Schedule III, easing restrictions and improving the outlook for the industry. ETF structure: swaps and U.S. exposure (Priority: 4/5): MSOS does not hold cannabis stocks directly; it uses swaps to gain exposure to U.S. multi-state operators, which differentiates it from older or Canada-heavy cannabis ETFs. Tax benefits and business upside (Priority: 4/5): The guests explain that Schedule III status may allow cannabis companies to deduct ordinary business expenses on the medical side, improving cash flow and enabling expansion or acquisitions. Risk, volatility, and portfolio sizing (Priority: 4/5): Despite the rally, the ETF remains highly volatile and deeply depressed over the long term, so it is framed as a small, speculative position rather than a core holding. Comparisons to other cannabis ETFs (Priority: 3/5): MSOS is presented as the dominant cannabis ETF because it has over $1 billion in assets, while other cannabis funds are far smaller and less relevant to the U.S. exposure story. Derivative risk ratings and leverage variant (Priority: 3/5): Bloomberg Intelligence’s traffic-light approach flags MSOS yellow because it uses derivatives and is active; a 2x leveraged version, MSOX, is described as even riskier.
Key Arguments: MSOS qualifies as an ETF of the moment because its price and trading volume both rose sharply in the past month. The marijuana rescheduling from Schedule I to Schedule III is the main catalyst behind the fund’s recent performance. MSOS is structurally important because it gives U.S. cannabis exposure via swaps, avoiding direct ownership issues tied to federal illegality. The biggest upside from rescheduling is tax relief for medical cannabis businesses, which could improve profitability and free up capital. Recreational-use revenue remains constrained by the old tax regime, so the policy change is only partial liberalization. Because the sector has been beaten down for years, even modest positive news can trigger outsized rallies. The ETF should be treated as a volatile satellite position, not a large portfolio allocation. MSOS stands out among cannabis ETFs because it has the scale and U.S. focus that others lack. A leveraged version exists for investors seeking amplified short-term exposure, but it increases risk substantially.
Data Points: 1-month return: 44% - MSOS was up about 44% over the past month, supporting its “ETF of the moment” status. 1-month trading volume increase: 56% - The ETF’s trading volume was up about 56% over the same period, indicating stronger investor interest. Assets under management: Over $1 billion - MSOS is described as the only cannabis ETF with more than a billion dollars in assets. Long-term drawdown: Down 88% - Even after the recent rally, the ETF is still far below prior levels, showing how beaten up the sector has been. Position sizing: Around 1% allocation - The guests suggest most investors would hold it as a small satellite position. Hot sauce bucket allocation: 10% to 15% - One speaker says speculative ideas like this might fit in a small “hot sauce” bucket within a portfolio. Leverage factor: 2x - MSOX is identified as the leveraged version of MSOS. Schedule change: Schedule I to Schedule III - The DOJ moved marijuana to a less restrictive controlled-substance category. Medical vs recreational market share: 25% medical / 75% recreational - The discussion says medical use is roughly a quarter of the market, while recreational adult use is the larger share. Event timing: April 4, 2023 - The opening ad break references the date of Bob Lee’s killing, unrelated to the ETF discussion.
Pivotal Quotes: "“it’s up about 44%, while its trading volume is up 44%”" — Andre Yap: Explaining why MSOS meets the screen for an ETF having a meaningful short-term moment. "“the whole optimistic outlook lies around taxes”" — Andre Yap: Describing why the rescheduling matters economically for cannabis companies. "“this ETF is like the movie Dazed and Confused”" — Eric Valtrunis: Using a cultural analogy to describe MSOS as a risky but relatively mild version of a cannabis-themed investment.
Implications: For listeners, MSOS represents a speculative way to bet on improving U.S. cannabis policy and tax treatment. The sector may benefit if rescheduling leads to better margins, expansion, or consolidation, but exposure remains volatile and only partially de-risked.
About Trillions
Money goes where it's treated best. That simple truth is a big reason why more and more money—trillions, in fact—flows into a powerful, low-cost tool that's quietly transformed investing in recent years. Exchange-traded funds, or ETFs, let you invest in everything from the stock market to gold like never before. This biweekly podcast will demystify them—and delight you in the process.