Matt Karnes, the founder of GreenWave Advisors, a financial research firm focused on the industry, estimates that legal retail cannabis sales will grow about 35 percent a year, to $35 billion, by 2022, assuming every state legalizes some form of marijuana use.
In Canada, at least three E.T.F.s focused on marijuana — Horizons Marijuana Life Sciences Index, the Marijuana Opportunities Fund and Evolve Marijuana E.T.F. — have been introduced, with mixed success.
About 70 percent of the companies tracked by the Alternative Harvest fund either focus on the production and sale of medicinal cannabis or are pharmaceutical companies that make cannabis-based products. Some of those companies, like Canopy Growth and Aurora Cannabis, are growers, while others have licenses to run dispensaries in the United States.
Other companies included in the E.T.F. have tangential links to marijuana, like the Altria Group and British American Tobacco, or Scotts Miracle-Gro, the lawn and garden company.
The bulk of the companies, though, are small Canadian ventures, which means that investors who buy into the fund are essentially betting on young, riskier companies, only some of which will survive as the market develops.
“You should think about this fund the same way you might think about, say, Chinese internet stocks,” said Dave Nadig, the managing director of ETF.com, a news and analysis website. “This might be speculative, but it could pay off.”
Samuel Masucci, chief executive of the E.T.F. Managers Group, which created the Alternative Harvest fund, said the companies in the fund are poised to grow as the laws regulating the marijuana industry are clarified. Investors, he said, have bought into that concept. E.T.F.s, he said, need about $50 million in assets to break even, a figure the Alternative Harvest raised soon after it was introduced.