Marijuana ETFs stumbled into 2020, yet investors who got burned last year trying to chase a one-time market darling are staying pat.

The ETFMG Alternative Harvest ETF, ticker MJ, has already sunk more than 2% this year, continuing a nine-month swoon for the exchange-traded fund that only a year ago was attracting money by the bushel on speculation the industry would continue its meteoric rise. It ended last year down 30% for one of the worst returns among all ETFs as the companies it tracks delivered dire sales and profit warnings.

The ongoing struggles for cannabis ETFs are a sharp blow to retail investors who tried to get in on the frenzied marijuana boom that began two years ago after Canada and California deregulated production. Instead of a ride straight up, they got the bust part of the cycle that often characterizes nascent industries. Yet U.S.-listed pot ETFs attracted $786 million in 2018 and another $720 million in 2019.

“If you look at the sector as a whole, it’s being created before our eyes so there’s going to be natural volatility,” said Ryan Sullivan, vice president of Brown Brothers Harriman’s global ETF services. “We’re seeing firms come in and out of the market and working in a cobbled together regulatory environment. That’s all combining to create some headwinds in that space.”

It wasn’t just MJ that floundered. At least five new marijuana funds came to the U.S. market in 2019, bringing the total to seven. Newcomers Cambria Cannabis ETF and the Global X Cannabis ETF lost more than 30% each, according to data compiled by Bloomberg. The biggest fund tracking the S&P 500 Index, on the other hand, rose 29% for its best year since 2013.

The ETF debuts capped a two-year frenzy among fund providers to create products that offered access to the fledgling cannabis industry. MJ characterized the gold rush mentality, converting its focus at the end of 2017 from tracking Latin American real estate to tracking an index of cannabis companies.

But exuberance that the pot industry will become a multibillion-dollar behemoth has waned as some companies posted disappointing earnings reports amid stalling legalization efforts and struggles to develop the right mix of products.

“It had to be tough to stomach, especially with all the excitement around it and the fanfare -- I’m sure anybody who bought into it, it was potentially a wake-up call for them as to what it would take to see this through,” said Eric Balchunas, an analyst with Bloomberg Intelligence.

Although political and regulatory risks could put a damper on proliferation, many analysts are forecasting an uptick in sales in 2020. In Canada, sales could surge by 35% this year, while additional U.S. states may adopt pro-marijuana policies thanks to high levels of support, according to research from Bloomberg Intelligence.

That’s left many investors hopeful about a resurgence, according to Balchunas, with the MJ fund, for instance, seeing inflows despite its double-digit loss. The fund took in about $590 million last year, its third consecutive year of inflows. In fact, all five of 2019’s U.S. newcomers saw positive flows for the year.

“The fact that it can retain the assets it has despite a year like this is utterly rare and unusual,” said Balchunas. It’s “a good sign for the pot ETF category going forward.”

--With assistance from Claire Ballentine.

This article was provided by Bloomberg News.