Trade the Cannabis index

Take a position on the 20 biggest cannabis stocks with City Index for exposure to a young sector with real growth potential despite increased industry regulation.

  • Index weighted by market capitalisation
  • Margins as low as 10%
  • Go long or short
  • Spreads from 6 pts

Will the Cannabis Index take off again?

Nascent industries with strong growth prospects attract lots of investor interest. This interest was catalysed in 2020 when the incoming Biden administration fuelled optimism for looser regulations. The market was worth over US$20 billion with a projected value of some US$111 billion by 2028 (Verified Market Research).

However, many cannabis stocks struggled in 2021. In Canada, price competition, oversupply and a lack of dispensaries put downward pressure on the index – and there were additional issues for US cannabis stocks as legalisation efforts stalled.

Could 2022 see a return to the uptrend of late 2020? If US legalisation efforts reignite, it could cause Canadian cannabis operators to take advantage of the growing market across the border.

Quick facts

Our Cannabis index features 20 publicly-listed companies, dominated by enterprises headquartered in Canada and trading on the Canadian stock exchange.

The index is weighted by market capitalisation and is rebalanced quarterly. Companies qualify for inclusion if they have more than 50% revenue exposure to the cannabis industry, which comprises cultivation, production of derivatives, biotechnology, commercialisation, and secondary services.

Number of constituents:
Market hours:
1.3 –06.00 AEST
Spread: Fixed
20 pts

The impact of cannabis legality

Cannabis remains federally illegal in the United States, but some states have started permitting marijuana for medical and recreational use in recent years.

In Canada, recreational cannabis use was federally legalised in 2018, allowing several legitimate pot companies to fly high – many of which went public.

Typically, Canadian stocks are the best way for traders to gain exposure to the global expansion of legal marijuana, a market that some experts to grow by 18% year-on-year through to 2027.

Our team of analysts keep an eye out for cannabis stock movements, so be sure to stay abreast of the news.

How to trade the Cannabis index

Many commentators say cannabis stocks look expensive by traditional metrics. Few are consistently profitable and with some it’s too early to tell if they will be. Traders taking those views to heart may wish to sell or go short on the Cannabis index.

On the other hand, you can buy or go long in cannabis if you think there are enough factors in play to drive strong growth at the top end of the market. The Biden administration is thought to be relatively open to the concept of wider relaxation on cannabis laws.

As with all our other trading instruments, our Cannabis index charts are easily accessible on any device, and come with technical indicators and drawing tools as standard.