Psychedelics and Cannabis ETF Launches on NYSE Arca in First for the U.S.

The Defiance Next Gen Altered Experience ETF allows investors to gain exposure to a basket of psychedelics and cannabis stocks.

Defiance’s latest ETF product focuses on medical psychedelics and cannabis companies, trading under ticker symbol PSY on NYSE Arca; the world’s largest ETF exchange.

Importantly, its listing on the New York-based exchange provides convenient access for U.S. investors, in contrast that launched earlier this year on the Canadian NEO Exchange.

In a summary prospectus filed with the SEC, Defiance set out the key terms of the ETF. The Next Gen Altered Experience ETF tracks an underlying index in a passive manner. In this case, the index is the BITA Medical Psychedelics, Cannabis, and Ketamine Index.

The index includes public companies listed on a U.S. or Canadian exchange that derive at least half their revenue from the medical psychedelics, cannabis, or ketamine industries.

The inclusion of Canadian-listed stocks is believed by the index sponsor to be important in capturing key players in the medical psychedelics and cannabis sectors, given their geographic skew.

Companies must meet some other requirements, such as a minimum market cap of $75m and certain liquidity profiles.

At launch, 21 companies are included in the Index and thus the ETF, including Compass Pathways,  MindMed, Numinus and Cybin.

The majority of these 21 companies are in the medical cannabis field, as an aggregate weight of 35% of the underlying index is assigned to psychedelics healthcare companies, while 65% is assigned to medical cannabis companies. The index will be periodically rebalanced to ensure that no one company can occupy greater than 7% of the index.

Based in New York, Defiance ETFs operates a number of ETFs covering disruptive sectors such as quantum computing (QTUM), small cap biotechs (IBBJ), and 5G (FIVG). The latter ETF had approximately $1.2bn under management as of May 28, 2021.

The launch of this ETF may signal growing investor interest in psychedelics, and seeks to provide U.S. investors greater access to the emergent market.

Notes and Resources

Further Reading and Resources:

• Defiance’s Investment Case
• Next Gen Altered Experience ETF Fact Sheet
• BITA Index Methodology Guide Book

Holdings, as of May 28, 2021:

View the live holdings at Defiance ETFs.