You see “Cannabis ETF” on the label and think you know what you’re getting: a basket of companies tied to the growth of the cannabis industry. With the sector back in the headlines after a presidential video endorsement sent cannabis stocks soaring, it’s more important than ever to look under the hood. But what if one ETF is like a potent, high-growth sativa, while another is more like a calming, defensive CBD oil? The truth is, beneath the surface-level theme, these funds can have wildly different investment philosophies, risk profiles, and portfolio “flavors.”
Today, we’re diving into the emerging world of cannabis investing by comparing four distinct ETFs:
- MSOS – AdvisorShares Pure US Cannabis ETF
- MJ – Amplify Alternative Harvest ETF
- TOKE – Cambria Cannabis ETF
- WEED – Roundhill Cannabis ETF
A quick look at their performance tells you they are anything but interchangeable. Let’s explore the story the numbers tell.
The Performance Story: A Tale of Two Markets
Performance alone reveals how differently these funds behave. During the brutal industry downturn of 2022, when the broad market (ACWI) fell -18%, the cannabis sector was hit much harder. Yet, the level of pain varied dramatically. MSOS plunged a staggering -72%, while TOKE managed to limit its losses to a comparatively modest -44%.
Fast forward to the explosive 3-month rally ending in September 2025. MSOS and WEED skyrocketed over +130%, capturing the industry’s renewed optimism with incredible force. Meanwhile, TOKE posted a respectable +48% gain but was left in the dust by its more aggressive peers.
Why the huge performance gap? It all comes down to how each fund is built. Let’s look under the hood.
Under the Hood: Finding the Flavor
Each fund has a unique recipe that defines its character. We’ve assigned a personality to each to capture its essence.
MSOS: The US Concentrate
If you’re looking for a high-octane, targeted bet on the biggest names in cannabis, MSOS is your vehicle. As an actively managed fund, it focuses exclusively on multi-state operators (MSOs). Its portfolio is more concentrated. This concentration in a few key players makes it highly sensitive to US-specific regulatory news and the performance of market leaders. Please note that this exposure is created through stock and the use of Swaps.
Defining Trait: US-focused and highly concentrated in a few companies.
Risk Profile: Very high volatility. Its 3-year downside capture of nearly 300% means it has historically fallen much harder than the global market during downturns.
Best for: The investor seeking a pure, aggressive, high-risk/high-reward strategy.
MJ: The Global OG
As the oldest cannabis ETF and a passively managed fund, MJ offers a more traditional, diversified approach. It tracks a global index, giving you exposure beyond U.S. borders. Its mandate is also broader, including companies in the tobacco industry, making it a true “Alternative Harvest” fund. This global diversification and inclusion of more mature companies give it a slightly different risk profile than the US-only funds.
Defining Trait: Passive, global, and diversified across related “vice” industries.
Risk Profile: High volatility, but less extreme than MSOS or WEED. It has the lowest long-term debt-to-equity ratio among its peers.
Best for: The investor who wants broad, passive, and global exposure to the alternative harvest theme without making a concentrated bet.
TOKE: The Defensive Value Fortress
TOKE is the standout outlier of the group, prioritizing capital preservation and fundamentals. It’s the only fund in the comparison with positive returns on equity and net margins. This focus on quality is reflected in its portfolio, which has a massive 57% allocation to the more defensive Consumer Staples sector. This unique construction has allowed it to weather market downturns far better than its peers.
Defining Trait: Actively managed with a strong defensive tilt and a focus on financially healthier companies.
Risk Profile: By far the lowest volatility and the best downside protection in the group. It’s the only fund with a positive 3-year Sharpe ratio, indicating better risk-adjusted returns (using ACWI as the benchmark).
Best for: The risk-averse investor who wants exposure to the cannabis theme but with a much smoother ride and a focus on value.
WEED: The Aggressive Small-Cap Specialist
WEED offers a hyper-focused, tactical bet on a specific corner of the market: U.S. small-cap companies in the cannabis “ecosystem.” Its portfolio is 100% allocated to small-cap stocks. Please note that this exposure is created through stock and the use of Swaps.
Defining Trait: A pure play on U.S. small-cap companies within the cannabis ecosystem.
Risk Profile: Extremely high volatility, similar to MSOS. Its performance is tied to the speculative sentiment surrounding smaller, less-established companies.
Best for: The tactical investor looking to make a very specific, aggressive bet on the growth of the infrastructure and support services behind the cannabis industry.
Choose Your Flavor
As you can see, “cannabis ETF” is not a monolithic category. Your choice depends entirely on your investment goals and risk tolerance.
| Flavor Profile | Best For |
|---|---|
| For US exposure: MSOS offers a concentrated bet on the leaders. | High-risk, aggressive investors focused on U.S. MSOs. |
| For global diversification: MJ provides a passive, broader approach. | Investors wanting passive, global exposure to the “alternative harvest” theme. |
| For a defensive stance: TOKE prioritizes quality and aims to smooth the ride. | Risk-averse investors who prefer a focus on fundamentals and value. |
| For a relatively concentrated focus: WEED targets a small group of concentrated players (similar to MSOS) | Tactical investors wanting an aggressive bet on the cannabis support ecosystem. |
This analysis was just a taste. Every investor’s palate is different, and the right ETF for you depends on what you want to achieve.
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This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
