A stock index is typically comprised of publicly-listed companies that meet certain requirements such as market capitalisation, the price of each share, and daily trading value.

Stock indexes can be a useful tool for investors to get a broader overview of any given market, often in contrast with other markets. For example, you might wish to contrast the ASX200 with the S&P500 to see how Australia’s leading companies fare against those of the United States.

For those interested in investing in cannabis stocks, New Cannabis Ventures has a series of cannabis stock indexes, such as the Global Cannabis Index, the North American Cannabis Index, and the Canadian Cannabis LP Index.

However, for those interested in the Australian cannabis industry, there hasn’t been an index or metric available to see how cannabis companies from the land Down Under are performing against their global counterparts.

The fastest growing cannabis industry in the world demanded its own index. This is why The Green Fund launched its Australian Cannabis Index (ACI).

Now, for the first time, investors can see how ASX-listed companies are performing in their own backyard, and on the global stage.

The Green Fund’s ACI is comprised of 16 ASX-listed cannabis companies that must meet the following requirements:

  • Companies must have a stock price that is greater than $0.01 over a 10-day average
  • They must have an average market cap above $10m
  • Finally, they need a daily trading value above $50,000

The ACI is rebalanced quarterly and allows ASX investors to see how Aussie pot stocks are performing, as well as comparing the broader Australian cannabis stock market against the HMMJ, the S&P500, and the All Ordinaries.

Image: The Green Fund

As you can see, the HMMJ, which is an ETF that seeks to replicate the performance of the North American Cannabis Index, has been soaring as of late.

North America’s cannabis industry growth is likely spurred on by the inauguration of Joe Biden, who has stated that he would like to federally decriminalise cannabis, in addition to the newly-acquired Democrat majority in the US Senate, which should allow for more favourable legislative decisions when it comes to cannabis.

Currently, only medical cannabis is legal in Australia, and given the nascency of the industry, cannabis legislation is far from set in stone. As such, it’s currently a free-for-all as to which companies will dominate the space.

As the industry matures, the ACI can provide investors with a bird’s-eye view of the overall health of the Australian cannabis industry and the companies within it, benchmarked against other key indexes.

Mark Bernberg is a long-time cannabis investing enthusiast and founder of The Green Fund, a global research house with a focus on the Cannabis Industry.