Thematic ETFs offer a powerful lens into the state of an industry, but a simple price chart can often mask the underlying financial health of its components. Today, we’re using the ETF Action portfolio visualizer to break down the holdings of a cannabis-focused fund, revealing a stark and challenging reality. The key theme is immediately clear: for most of the industry, profitability remains elusive. The heatmap, which visualizes the last twelve months (LTM) of net income, shows a deep divide between a handful of profitable niche players and the deeply unprofitable companies at the sector’s core.
Heatmap intentionally set to equal weight and does not represent actual weight of holding in ETF
Source: ETF Action, FactSet
The Outliers: Finding Profit in Ancillary Businesses
At first glance, the green squares offer a glimmer of hope. The most prominent profitable holding is $VFF (Village Farms International), which posted a positive net income of $10M. Similarly, $CRON-CA (Cronos Group) and $LOVE-CA show positive figures of $19M and $11M, respectively. In the REIT space, $KERN stands out with a solid $19M in net income. A common thread here is that these companies often have significant operations outside of pure-play cannabis, such as $VFF’s established produce business or $KERN’s position as an industry landlord. This suggests that the most reliable profitability in the broader cannabis ecosystem is currently found in ancillary businesses that are insulated from the intense pricing pressure and regulatory costs of the core market.
The Core Challenge: A Sea of Red for Cannabis Producers
The dominant story of this heatmap is the staggering losses posted by the largest cannabis producers. The deepest red square belongs to $TLRY (Tilray Brands), which has burned through an astonishing $2.187 billion over the last twelve months. It’s not alone. Other major players like $JAZZ (Jazz Pharmaceuticals) and $WEED-CA (Canopy Growth) show massive losses of $495M and $375M, respectively.
These figures reflect the harsh reality of the post-legalization cannabis market: intense competition, high capital expenditures, pricing compression, and a complex regulatory landscape are creating a brutal operating environment. This isn’t just a few underperformers; it’s a systemic issue plaguing the industry’s biggest names, painting a clear picture of the immense financial hurdles that still need to be overcome.
Conclusion & Key Takeaway
This net income heatmap tells a cautionary tale about the current state of the cannabis industry. While the sector holds immense long-term potential, the path to profitability is proving to be incredibly difficult. The data, viewed through the lens of this ETF’s holdings, shows that the industry’s largest names are also its biggest cash burners. The most stable financial footing is currently found on the periphery—in real estate or diversified agricultural operations—rather than in the core business of cultivation and sales.
Gaining this kind of immediate, in-depth insight is precisely the power of ETF Action’s portfolio visualizer. Instead of just tracking an ETF’s price, this tool allows you to instantly decompose its performance and understand the why behind the what. The intuitive treemap interface lets you evaluate vast datasets, identify the true leaders and laggards at a glance, and grasp the thematic currents driving any ETF’s return. For any analyst or investor looking to move beyond surface-level data, tools like this are indispensable for making informed decisions.
This content was generated with the assistance of an AI language model and has been reviewed and edited for accuracy and relevance by human staff.
The information provided in this article is for informational and educational purposes only. It is not intended to be and should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions.
