Cannabis ETF Guide: MSOS, MJ, YOLO & More

Cannabis Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges and hold a basket of cannabis-related securities. They provide diversified exposure to the cannabis sector through a single ticker, eliminating the need to research and buy individual cannabis stocks.

Unlike individual cannabis stocks — many of which trade on OTC Markets and are unavailable on platforms like Robinhood — cannabis ETFs trade on major US exchanges (NYSE Arca, NASDAQ) and are accessible through virtually every brokerage. This makes them the easiest way for most investors to gain cannabis sector exposure.

Cannabismarketcap tracks 8 cannabis ETFs. The most widely held include MSOS (US-focused MSOs), MJ (global cannabis), and YOLO (a blend of US and international holdings).

Every cannabis ETF tracked by Cannabismarketcap, sorted by market capitalization (assets under management proxy). Click any ticker for detailed holdings and performance data.

Choosing between cannabis ETFs depends on what type of exposure you want:

US-Focused (MSOS): The AdvisorShares Pure US Cannabis ETF holds primarily US multi-state operators. This is the most direct way to invest in the US cannabis market without buying individual OTC stocks. US cannabis companies cannot be held directly by most ETFs due to federal illegality, so MSOS uses swap agreements to gain exposure.

Global/Canadian (MJ): The ETFMG Alternative Harvest ETF holds a broader mix of Canadian LPs, US companies, and ancillary businesses. It provides more international diversification but may include companies with limited cannabis revenue.

Blended (YOLO): The AdvisorShares Pure Cannabis ETF holds a mix of US and Canadian cannabis companies. It aims to capture opportunities across both markets.

Here is a comparison of the two approaches:

Define Your Thesis: If you believe US cannabis legalization is the primary catalyst, MSOS provides the most direct US exposure. If you want broader global cannabis exposure including Canadian LPs, consider MJ or YOLO.

Check the Holdings: ETF holdings change quarterly. Review the current holdings to ensure the fund aligns with your investment thesis. Some cannabis ETFs include tobacco companies, pharmaceutical firms, or other tangentially related businesses.

Compare Expense Ratios: Cannabis ETFs charge annual expense ratios typically ranging from 0.45% to 0.80%. Over time, this fee compounds and reduces returns. Compare ratios across similar funds.

Evaluate Liquidity: Choose ETFs with higher average daily trading volume to ensure tighter bid-ask spreads and easier entry/exit. The most popular cannabis ETFs trade millions of dollars daily.

Consider Tax Implications: ETFs may distribute capital gains annually. Check the fund's distribution history and consider holding cannabis ETFs in tax-advantaged accounts (IRA, 401k) if possible.