Poseidon Dynamic Cannabis ETF to Shut Down

The largest cannabis-focused exchange-traded fund (ETF), managed by AdvisorShares, is closing as investor interest in the cannabis sector diminishes. The Poseidon Dynamic Cannabis ETF, led by founders Emily and Morgan Paxhia, will cease trading on August 25, reports CNBC. The industry faces challenges due to its quasi-legal status, resulting in falling wholesale prices and obstructive federal laws, hindering growth and investor confidence. With nearly half of U.S. states legalizing recreational cannabis, federal regulations still prevent banking access and interstate trade, causing oversupply and price drops.

The ETF’s closure and other declining cannabis investments reflect the broader shift in investor sentiment. Poseidon Investment Management’s ETF has lost 74% of its value, alongside a 60% decline in another AdvisorShares fund in the industry. Beyond market forces, the industry struggles with failed mergers, as seen with Cresco Labs and Columbia Care’s $2 billion deal. Mastercard’s decision to halt cannabis transactions on its debit cards further isolates the industry from major banking services. Regulatory barriers and market pressures continue to challenge the cannabis sector, dampening investor interest and growth prospects.