Cannabis ETF spent the first half of the year in the performance doldrums. But they have rallied of late on news that the Trump administration is open to reclassifying marijuana as a less dangerous drug. Despite the fact that marijuana is legal in most states, it is still federally categorized as a Schedule I drug under the Controlled Substances Act along with drugs like heroin.
Under the Biden administration, progress was made toward de-scheduling weed to Schedule III, following a recommendation from the FDA. The Trump administration seems similarly aligned in that thinking now that the new head of the DEA has been sworn in.
“We’re looking at reclassification,” Trump told reporters during a recent press conference. “We’ll make a determination … over the next few weeks.”
According to the Wall Street Journal, the president also told donors at a golf fundraising event earlier this month that he was interested in reclassifying the drug.
A Much-Needed Relief Rally
With many marijuana stocks trading at penny stock, near-low levels, reclassifying weed as Schedule III is welcome news. The move would ease restrictions in areas such as banking and interstate commerce and help facilitate business tax deductions (Section 280E) and medical research.
The news also comes at a time when many marijuana companies have huge debt loads they need to restructure. Some estimates indicate that these companies face $6 billion in debt due to be paid in the next year. At the same time, industry profits have been falling. As a result, many indebted firms want to restructure their debt, which could allow them to stay afloat. Cannabis companies can face federal hurdles that prevent them from declaring bankruptcy.
Such companies have also had a hard time competing with unlicensed dealers. Marijuana market tracking firm BDSA says there were more than $44 billion in illegal weed transactions in 2024. Federal intervention and reforms could help put a stop to these transactions.
Cannabis ETFS to Consider
Given the volatility and solvency issues at the individual stock level, ETFs are a safer, more diversified method to get exposure to this theme. Thanks to the recent de-scheduling rally, cannabis ETFs have now staged an impressive comeback and are in positive territory for the year.
| Ticker | ETF Name | Total Assets | YTD Return | Expense Ratio |
|---|---|---|---|---|
| MSOS | AdvisorShares Pure US Cannabis ETF | $560,505,000 | 23.36% | 0.77% |
| MJ | Amplify Alternative Harvest ETF | $134,336,000 | 14.92% | 0.76% |
| CNBS | Amplify Seymour Cannabis ETF | $81,550,200 | 16.76% | 0.77% |
| YOLO | AdvisorShares Pure Cannabis ETF | $32,467,000 | 26.86% | 1.12% |
| MSOX | AdvisorShares MSOS Daily Leveraged ETF | $30,230,400 | -1.74% | 0.97% |
| TOKE | Cambria Cannabis ETF | $12,042,200 | 18.86% | 0.43% |
| WEED | Roundhill Cannabis ETF | $6,919,280 | 25.21% | 0.00% |
| Source: VettaFi ETFdb as of 8/12/25 |
The top ETF sponsors in cannabis are AdvisorShares and Amplify ETFs. Amplify already had its actively managed Amplify Seymour Cannabis ETF (CNBS ) and built up its franchise in the space further when it acquired the ETFMG ETF business. ETFMG debuted the first cannabis ETF, now called the Amplify Alternative Harvest ETF (MJ ), back in 2017.
Today, MJ’s largest holding at more than half of the portfolio is the active ETF managed by CNBC analyst Tim Seymour, CNBS. Similarly, the largest holding in the AdvisorShares Pure Cannabis ETF (YOLO ) is the issuer’s own ETF, the AdvisorShares Pure US Cannabis ETF (MSOS ), which represents 44% of the fund’s portfolio.
It is important to note that marijuana ETF exposures do vary, with some such as MSOS, CNBS, and the Roundhill Cannabis ETF (WEED ) offering access to the U.S. cannabis market via multistate operators, or MSOs, via total return swaps. It should also be noted that, thanks to fee concessions, Roundill’s WEED has an expense ratio of zero, making it the lowest-cost option.
Beyond those funds, more diversified approaches such as the Cambria Cannabis ETF (TOKE ) also include exposure to tobacco and beverage companies, with the potential to get into cannabis via acquisition.
Cannabis Investors Hoping for Brighter Days Ahead
How quickly cannabis reforms will be enacted remains to be seen. But clearly cannabis investors are hoping for brighter days ahead.
VettaFi LLC (“VettaFi”) is a data provider for CNBS, for which it receives an index licensing fee. However, CNBS is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of CNBS.
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