What Is the Best Cannabis ETF to Buy?

Cannabis ETFs offer diversified exposure to the marijuana industry, but performance and holdings vary significantly. As of 2024, the three primary cannabis-focused ETFs are the AdvisorShares Pure US Cannabis ETF (MSOS), ETFMG Alternative Harvest ETF (MJ), and AdvisorShares Pure Cannabis ETF (YOLO). MSOS focuses exclusively on US multi-state operators (MSOs) and has approximately $500 million in assets under management. Its top holdings typically include Curaleaf, Green Thumb Industries, Trulieve, and Cresco Labs. This ETF provides pure-play exposure to companies that could benefit most from federal cannabis legalization. MJ, the oldest cannabis ETF launched in 2015, takes a broader approach with $300+ million AUM. It includes international cannabis companies, tobacco firms with cannabis exposure, and cannabis-adjacent businesses like hydroponic equipment manufacturers. Major holdings often include Canopy Growth, Tilray, and Scotts Miracle-Gro. YOLO maintains a global focus with roughly $50 million AUM, investing in both US MSOs and international cannabis companies. It offers more concentrated exposure with typically 25-30 holdings versus MJ's 30+ positions. Performance has been volatile across all cannabis ETFs. Since inception, these funds have experienced significant drawdowns, with peak-to-trough declines exceeding 70% during market downturns. MSOS has shown stronger recent performance due to improving fundamentals among US operators. Key considerations include expense ratios (typically 0.70-0.85%), liquidity, and regulatory risk. Cannabis remains federally illegal in the US, creating ongoing uncertainty. These ETFs also cannot access traditional banking services, limiting operational efficiency. **Disclaimer:** This analysis is for informational purposes only and does not constitute investment advice. Cannabis investments carry substantial risks including regulatory uncertainty, volatility, and potential total loss. Consult with a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.