ETF manager predicts that cannabis stocks will provide higher growth at lower valuations in 2022, making them a top trend to watch.

Tim Seymour, a portfolio manager, believes that brand building will be the main focus in the cannabis industry in 2022.

This year, larger players in the cannabis industry will increase their presence in existing markets and adjacent industries, according to Seymour, who spoke on CNBC's "ETF Edge."

Seymour, who runs CNBS, stated that one of the major themes for cannabis investors in 2022 should be the emergence of brands.

This week, CEO Irwin Simon revealed that his company would adopt a two-pronged strategy for business until legislation is finalized: concentrating on countries where marijuana is legally regulated and expanding into adjacent markets.

"Simon stated on "Closing Bell" that while waiting for legalization in the U.S., one can build out brands and categories related to the cannabis industry, such as the spirits, beer, food, and hemp businesses."

"One day, you will witness THC-infused beer, bourbon, and edibles in the market. Consumers will be familiar with the brands that offer these products."

Seymour, founder and chief investment officer of Seymour Asset Management and a CNBC contributor, stated that publicly traded cannabis companies can protect themselves from margin pressures by being resilient in the face of a challenging 2021, during which cannabis ETFs declined between 20 and 40%.

""We entered 2022 with lower valuations than we did in 2021, despite offering higher growth than many other sectors outside of cannabis," Seymour stated."

Seymour prefers to invest in the rapidly evolving space through his actively managed exchange-traded fund, which he believes provides the necessary diversification and agility.

An active ETF strategy allows investors to quickly adapt to changes in the industry, he said.

In 2021, CNBS was the second-best performing cannabis ETF, surpassed only by TOKE, which is significantly smaller.

Seymour attributed his fund's strength to having a diverse international portfolio and taking advantage of the growing cannabis debt market, which enabled companies like to issue innovative debt instruments that could protect against market fluctuations.