The largest in this group is the passively managed ETFMG Alternative Harvest ETF (MJ), which in December 2017 changed from being the Tierra XP Latin America Real Estate ETF (LARE) and almost immediately zoomed from being a $6 million fund to having north of $100 million in assets. It has continued to grow, and today has a little more than $1 billion in assets under management. Tobacco companies comprise 10 of the MJ fund’s 38 holdings, according to XTF.com.

The AdvisorShares Vice ETF (ACT), which launched in December 2017, is an active fund with a tri-focus on alcohol and tobacco (both sectors originally comprised about 40% of the portfolio mix) and cannabis (a roughly 20% weighting). Those percentages have changed over time as more cannabis-related companies entered the portfolio, but the fund continues to put a sizable emphasis on booze and smokes for their dividends and to act as ballast to offset the more volatile cannabis sector.

The three U.S.-listed cannabis ETFs that debuted this year are more pure plays on this industry. The AdvisorShares Pure Cannabis ETF (YOLO) launched in April and was billed as the first actively managed ETF focused solely on cannabis companies. The fund is run by the same team behind the ACT fund.

YOLO has garnered $58 million in assets versus just a tad less than $14 million for ACT, indicating that investors are more interested in the thrills and spills—and potential upside—of cannabis (again, this is a volatile sector) than the perceived stability offered by consumer staples companies in the alcohol and tobacco industries.

The Cannabis ETF (THCX) from Innovation Shares debuted on July 9 and is promoted as the first passively managed pure-play cannabis ETF. And now there’s the Amplify Seymour Cannabis ETF, which joins the YOLO fund in the actively managed pure-play cannabis arena.

That’s a varied list of marijuana funds for investors to choose from. But some observers wonder if the initial excitement over cannabis ETFs has faded. As a product provider specializing in thematic ETFs, that’s something Amplify ETFs is familiar with.

In January 2018, it rolled out the actively managed, blockchain-focused Amplify Transformational Data Sharing ETF (BLOK) on the same day as the passively managed, blockchain-focused Reality Shares Nasdaq NexGen Economy ETF (BLCN). These funds co-shared the honor of being first-to-market blockchain ETFs and were instant smash hits that both quickly topped the $100 million mark in assets. Two other blockchain ETFs that launched later that month generated less buzz and attracted far fewer assets. Today, BLCN’s asset base has shrunk to $71 million, while BLOK sits at $110 million as excitement about blockchain has subsided.

A blockchain fund that launched in May 2018, the REX BKCM ETF (BKC), closed earlier this year. That actively managed fund was a collaboration between exchange-traded product provider Rex Shares and Brian Kelly, a CNBC Fast Money correspondent and founder and CEO of BKCM Funds LLC.

Is The Demand There?

The cannabis space has been extremely volatile due in part to the iffy regulatory environment, as well as from news reports that the legalized recreational marijuana trade hasn’t lived up to the hype. For example, sales of recreational pot in Canada seriously undershot projections from October 2018 (when it was legalized nationally) through March. Sales picked up a little in April and May, but they’re still below expectations.

The culprit? The small number of licensed suppliers couldn’t meet demand, so potential customers relied on the black market for their weed. In addition, marijuana prices on the black market are much cheaper than prices at licensed retailers.

“The rollout in Canada has had some issues related both to supply and pricing, and some bottlenecks were created because they wanted be very slow and careful in how this was done on a province by province basis,” Seymour says. “Using that as a measure of overall Canadian demand isn’t a good read on that market.”

Naturally, both Seymour and the folks at Amplify are bullish on the long-term future of cannabis.

“I don’t have any question about the global consumption trend that’s happening,” Seymour says. “The story for the sector is about the crossover, and not as much about the existing user base. As you get into biopharma and the science of the canabanoid systems and their potential benefits for various diseases, I think this has massive upside potential.”

As Magoon points out, about 70% of all cannabis sales are related to medical uses.

But Seymour acknowledges the ride to weed-generated wealth could be bumpy for a while.

“Investors need to assess what’s an appropriate allocation for them to a higher-growth, higher-risk industry,” he says. “But make no mistake that for the foreseeable future cannabis will probably trade at a beta of one-and-a-half or two on the way up, and probably three-and-a-half to four on the way down.”

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