CEO Q&A
Interview between Louis Kyron, Managing Editor of Canadian CANNAINVESTOR Magazine and Steve Hawkins, President and CEO of Horizons Medical Marijuana Life Sciences ETF (TSX:HMMJ).
Q) Your "HMMJ Backgrounder" clearly states that HMMJ "will not provide exposure to companies involved in the production or distribution of recreational marijuana nor will it hold companies involved in the production or distribution of medical marijuana in the United States, which still remains illegal at the federal level, despite being legal under certain state laws".
Looking at your holdings, there is a spectrum of companies diversified not only by subsector but also geographically. What is your position on holding companies that are ancillary to medical marijuana in Canada such as those in the vapourizer or grow-your-own business? Some of your holding companies do sell, for example, vapourizers and serve the grow-your-own market. Similarly, regardless of the fate of recreational usage in Canada, there is a need for roadside marijuana ingestion detection. Is that an area of interest to HMMJ?
A) As per the Index methodology, the Index will invest in any company that has significant business interest in the marijuana industry, assuming their business is operating under federally legal guidelines.
Businesses which are heavily invested in the ancillary aspects of the marijuana industry are included in the Index. Most notably, Scott’s Miracle- Gro is one of the largest holdings in the Index. This is due to the fact that Scott’s is one of the largest companies to make a significant investment in the marijuana industry by seeking to be the hydroponic equipment and fertilizer-provider of choice for commercial marijuana growers.
Q) Further to the above question, some of your core holdings themselves have holdings in the United States. Is that seen as a risk?
A) HMMJ will not make investments into companies with business activities that are in violation of U.S. or Canadian federal or state/provincial laws. Any companies held in the ETF’s Index that could potentially have U.S. business activities and may be in violation of U.S. federal laws in particular, are actively being reviewed by Horizons. The ETF could potentially remove any companies from its portfolio if it was determined that the company was operating illegally under any federal laws.
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