June 30, 2025
Commentary
Introduction
The Ninepoint Cannabis & Alternative Health Fund is focused on the key drivers affecting cannabis, health and wellness, pharma and consumer health sectors. We invest in companies that are embracing new modalities, innovative technology and effective distribution. We believe that people globally are becoming more aware of alternative treatments and seeking out the best providers of select services. Our goal is to invest in those companies best positioned to take advantage of these macro changes.
Summary
In this month’s commentary, we look at recent regulatory changes taking place in the state of Texas, where the Governor endorsed increased medical conditions to be treated with cannabis, as well as vetoing a ban on hemp-derived THC products. Our belief is that Gov Abbott’s views are important nationally, as a senior Republican from a state with over 30 million people, he could be influential in the national debate. With respect to US federal regulatory changes and the administrative process to move cannabis from a Schedule 1 drug to a Schedule 3 drug remains stalled. However, cannabis stocks have been responding positively as there has been some renewed optimism based on meetings and lobbying efforts directed at the Trump administration. It is too early to know whether these efforts will be successful in getting the process back on track. We also highlight a recent addition to the Fund, VitalHub (VHI), a Canadian software company focused on providing healthcare solutions to patients, healthcare professionals and hospitals in Canada, the UK and Australia.
For the month, the top performing Fund position contributing to performance was Eupraxia (EPRX)+ 36.6% as it announced that it provided its first patients with a dosage in a Phase 2b RESOLVE trial for eosinophilic esophagitis (a chronic inflammatory condition of the esophagus). This is significant as it transitions the company to placebo-controlled studies enrolling 60 patients globally. We also believe that Eupraxia’s slow-release formulation has the potential to be useful for a number of additional conditions, which would greatly expand its addressable market. Another recent strong contributor to the Fund’s performance is Glass House Brands (GLASF), up approximately 20% from June 1st to date of writing (07-11-25). The company is uniquely positioned to take advantage of recently announced California cannabis and hemp regulatory changes.
Market Update
Markets remain preoccupied with trade tensions, inflation data, labor market health, and the US Federal Reserve’s policy path. A central concern for markets is what the US government do to deal with its continued debt issuance. Governments can’t reduce their debts without cutting spending. On the other hand, more government debt means lower growth; more taxes generate weaker receipts, and more government spending perpetuates inflation. This is the backdrop people must consider when watching President Trump's “Big Beautiful Bill” getting through Congress. Upcoming catalysts include the July 8 reciprocal tariff deadline and the July 15 inflation report, both of which could influence market sentiment and the equity market’s current bullish trend. We anticipate that June US inflation, to be reported July 15, should rise from May, while our belief on US inflation is that it will accelerate through the third quarter. Reciprocal tariffs may be delayed, but China tariffs are likely to stay between 25–40%. The combination of a global trade war and fiscal tightening is expected to slow short-term growth, with a possible modest downturn before renewed acceleration in growth and inflation.
Persistent government deficits, rising debt, and expansive monetary policy continue to drive inflation, erode purchasing power, and pose challenges for both consumers and investors.
Positive Changes to Texas Cannabis and Hemp Regulation
There have been significant changes in the regulation of cannabis and hemp in the state of Texas during the month. Gov. Greg Abbott signed a bill that will significantly expand the state’s medical cannabis program. Texas is still a low-THC state; however, the new law expands the number of conditions, adds product formats, new licenses and the potential for more dispensary locations.
The Governor then vetoed a bill that could have banned the sale of hemp-derived THC products in the state. Gov. Abbott went even further than simply vetoing the bill, suggesting that lawmakers consider an approach similar to the way alcohol is regulated; recommending barring the sale and marketing of THC products to minors, requiring testing throughout the production and manufacturing process, allowing local governments to prohibit stores from selling THC products and providing law enforcement with additional funding to enforce the restrictions.
The hemp-derived THC market is significant in Texas. Its large population of 32 million is the second most populous state next to California, and its hemp-derived THC market is estimated to generate approximately. $5.5 billion in sales within the state. Mark Bordas, executive director of the Texas Hemp Business Council. “The state currently has only four full-time employees trying to police over 8,000 licensees trying to sell hemp-derived THC products, so it stands to reason the state needs to commit to enforcing the laws and regulations already on the books,” said Bordas.
Abbott proposed nearly 20 regulations for the hemp industry in his veto, including raising permit and registration fees for hemp high enough to support robust enforcement and testing by the Texas Alcoholic Beverage Commission, and posting warning and danger signs at any store selling these products. Gov Abbott’s leadership within the Republican party may provide further support to the national debate as Congress continues to discuss cannabis banking laws and how the Farm Bill of 2018 might be dealt with.
VitalHub: Executing a Global Growth Strategy in Healthcare Services
The Fund has added a new position in a provider of software and database management services to global healthcare providers. VitalHub (VHI) has been operating since 2010 with over 1,000 customers across the UK, Canada, Australia, and Middle East regions. The focus of VHI is to operate within single payer regions, growing its business through its continued M&A strategy, allowing it to offer a broader array of services to a wider group of healthcare organizations.
The company has grown over the past 15 years through 21 acquisitions in a global consolidation strategy, with the goal of finding margin pick-up opportunities along with the ability to bolt additional services to its growing customer base. Its three primary service areas include: Patient services, managing patient visits (virtual or in person) as well as follow-up testing and communication of results; Care Management, making medical records accessible to both patients and medical professionals along with referrals; and finally, Workflow Automation, which assists medical staff with portals for ongoing accreditation and HR tools.
Highlighting two of its most recent acquisitions, in April, VHI announced the acquisition of Induction Healthcare Group PLC a London UK-based healthcare software company that provides patient portal services with appointment booking, document handling, and messaging capabilities installed in 90% of National Health Service (NHS) Trust Hospitals.
Induction Healthcare is added to VHI’s presence in the UK, strengthening its already varied successful acquisitions beginning in 2019. The transaction is expected to close on or before Jul. 31, 2025. On July 7th, VHI announced the acquisition of Novari, a Kingston, Ontario software provider with over 20 years in providing patients access to care. The Novari platform provides referral management, surgical wait list management and care coordination. With each acquisition, VitalHub seeks to provide a broader array of services to retain customers and grow revenues and margins.
Options Strategy
Since the inception of the option writing program in September 2018, the Fund has generated significant income from options premium of approximately CAD$5.25 million. We will continue to utilize our options program to look for attractive opportunities given the volatility in the sector and to assist in rebalancing the portfolio in favour of names we prefer, as we strongly believe that option writing can continue to add incremental value going forward.
Ninepoint Cannabis & Alternative Health Fund - Compounded Returns* as of June 30, 2025 (Series F NPP5421) | Inception Date - August 4, 2017
1M |
YTD |
3M |
6M |
1YR |
3YR |
5YR |
Inception |
|
|---|---|---|---|---|---|---|---|---|
Fund |
-1.46% |
-15.06% |
-4.39% |
-15.06% |
-32.22% |
-14.47% |
-10.30% |
-0.85% |
Statistical Analysis
Fund |
|
|---|---|
Cumulative Returns |
-6.54% |
Standard Deviation |
26.92% |
Sharpe Ratio |
0.04 |
The Ninepoint Cannabis & Alternative Health Fund, launched in March of 2017 is Canada’s first actively managed mutual fund with a focus on the cannabis sector and remains open to new investors, available for purchase daily.
Charles Taerk & Douglas Waterson
The Portfolio Team
Faircourt Asset Management
Sub-Advisor to the Ninepoint Cannabis & Alternative Health Fund