The AdvisorShares Pure US Cannabis ETF, known as MSOS, saw its shares fall 26% to approximately $4.80 by mid-January. This decline occurred after the fund had reached $6.45 in mid-December.
President Trump signed an executive order in late December that eased cannabis access, according to data from the Polymarket prediction market. Despite this action, marijuana remains classified as a Schedule I controlled substance at the federal level, as rescheduling did not happen in 2025.
The MSOS fund holds $921 million in assets. It provides exposure to U.S. multi-state operators such as Curaleaf, TerrAscend, and Trulieve. This is achieved through direct equity positions and swap contracts. The fund has an expense ratio of 0.78%.
Companies like Curaleaf and Trulieve continue to face significant challenges. They are subject to tax penalties under IRS Section 280E, which disallows standard business deductions. These operators also cannot access traditional banking services under current federal law.
Investors are watching for potential federal policy changes. Congressional movement on the SAFE Banking Act is one area of focus. This legislation would allow cannabis businesses to use banking services without federal penalties. Another development to monitor is any announcement from the DEA regarding rescheduling cannabis from Schedule I to Schedule III, which would reduce tax burdens.
The MSOS fund uses total return swaps to gain exposure to some U.S. operators that are listed in Canada. This is a workaround due to listing restrictions. Approximately 9.6% of the portfolio is held in cash equivalents. The swap structure introduces counterparty risk and can lead to tracking differences compared to direct ownership.
Another fund, the AdvisorShares Pure Cannabis ETF (YOLO), offers a similar strategy. YOLO was launched in April 2019 and has slightly higher assets under management at $940 million. Its expense ratio is 0.75%. YOLO's portfolio includes some international exposure alongside U.S. operators.