Poseidon Dynamic Hashish ETF to shut as investor curiosity wanes

New York, USA (TEH) – The Poseidon Dynamic Hashish ETF, managed by AdvisorShares, the biggest hashish fund supervisor, is ready to shut its doorways on August 25. The choice to liquidate belongings and pay shareholders by September 1 comes as investor curiosity within the legally restricted trade wanes, reflecting broader challenges confronted by the hashish sector.

The fund, spearheaded by sibling founders Emily & Morgan Paxhia, was launched on the New York Inventory Change in November 2021, throughout a pandemic-era hashish gross sales growth. Nonetheless, the closure is emblematic of the struggles plaguing the quasi-legal hashish trade, which has discovered it tough to scale. Wholesale costs have declined, and the dearth of federal reform has stymied the sector’s progress.

In an emailed assertion to CNBC, co-founder Morgan Paxhia acknowledged that the fund was not “proof against the broader macro-economic atmosphere and, extra particularly, the dramatic shift in investor sentiment that has impacted the hashish trade.”

The state of affairs is additional sophisticated by the authorized standing of hashish in the US. Whereas almost half of U.S. states have legalized the leisure use of hashish by adults, it stays unlawful on the federal stage. Labeled as a Schedule I substance alongside heroin and LSD, the trade has been barred from accessing most banking companies and from buying and selling throughout state traces. This has led to a glut of hashish in lots of states and a consequent drop in costs.

The sliding fairness values have precipitated traders to show away from the trade, and capital has dried up. Poseidon Funding Administration, which started in 2013 as one of many first cannabis-focused hedge funds within the U.S., has seen its ETF lose roughly 74% in worth since its inception, versus a 1.7% decline within the S&P 500. Its worth has plummeted 65% within the final yr and traded beneath $1 on Tuesday.

Different funds within the trade have confronted comparable fates. Pure US Hashish ETF, one other fund by AdvisorShares, has plummeted about 60% throughout the identical interval.

Poseidon’s closure is just not an remoted incident however relatively the most recent casualty in an trade strained by market forces and financial coverage. Final month, a $2 billion merger between hashish multistate operators Cresco Labs and Columbia Care went up in smoke greater than a yr after the businesses introduced the acquisition. Mastercard’s latest announcement that it’s going to cease permitting hashish transactions on its debit playing cards, in compliance with federal legislation, additional alienates the hashish trade from large banking.

The Poseidon Dynamic Hashish ETF’s closure is a stark reminder of the challenges going through the hashish trade. It underscores the pressing want for legislative reform and a reevaluation of financial insurance policies which have hampered progress. Because the trade navigates these turbulent waters, the query stays: Is Poseidon’s downfall a harbinger of extra important struggles to come back, or can the trade rebound and thrive in a quickly altering panorama?

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