In the world of exchange-traded funds, it's not surprising that cannabis funds are viewed as beneficiaries of former Vice President Joe Biden perhaps winning the White House.

What Happened: Marijuana ETFs join a slew of sector and industry funds seen as winners under a Biden Administration. Up 8.28% over the past month, the Amplify Seymour Cannabis ETF (NYSE: CNBS) is an example of a cannabis fund that's proving sensitive – in a good way – to expectations that the occupant of the Oval Office is soon to change.

CNBS, which turned a year old in July, is an actively managed fund and that strategy is making a world of difference. Over the past six months, CNBS is higher by more than 22% while the passively managed ETFMG Alternative Harvest ETF (NYSE: MJ), the largest cannabis ETF by assets, is lower by 9.54% over the same period.

Why It's Important: Analysts see the Biden/Harris stance on punishments for low-level marijuana crimes as a potential catalyst for cannabis assets.

“Democratic presidential candidate Joe Biden and vice presidential candidate Kamala Harris have proposed decriminalizing cannabis,” writes Morningstar analyst Kristoffer Inton. “Although this would simply reduce incarceration for low-level possession crimes, it could signal the easing of federal prohibition.”

Home to 23 stocks, CNBS is a concentrated portfolio and like many of its rivals, it's heavy on Canadian names, which are struggling. However, CNBS can augment that exposure via allocations to cannabis agriculture technology and real estate companies as well as device makers, cannabis finance and media names, among others. Traditional passive marijuana ETFs are often light on such companies. Plus, there are state-level catalysts looming.

“Presidential election aside, Arizona, Montana, and New Jersey are voting on recreational legalization, Mississippi is voting on medical, and South Dakota is voting on both,” notes Inton.

What's NextCanopy Growth (NYSE: CGC), which is the largest CNBS holding at a weight of 14.64%, is the most levered of the Canadian growers to goings-on in the U.S. market, potentially positioning the ETF for success on the back of a Biden victory.

Canopy “is the only Canadian company we cover that has direct exposure through its deal to acquire U.S.-based Acreage Holdings immediately upon change to federal law. We think Canopy paid a good price and acquired an attractive option for an accelerated entry into the U.S. cannabis market,” according to Morningstar.

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