E486 - Why MSOS doesn't Own Cannabis Stocks

 

Why MSOS Doesn't Own Cannabis Stocks

Brief Description

MSOS looks like a cannabis-stock ETF on the outside, but underneath the hood it is built very differently from a traditional ETF.

This Notebook explores the legal and financial plumbing that led MSOS to use total return swaps to obtain economic exposure to U.S. cannabis operators rather than simply holding many of their shares directly.

The research follows the trail from federal cannabis restrictions and custodial limitations to swap counterparties, collateral, financing costs, valuation, liquidity, and tracking error.

The big l...