Top Weed Stock ETFs to Watch in 2025

Introduction: Why Cannabis ETFs Are Back on Investors’ Radar in 2025

The cannabis industry has been on a long and volatile journey, with periods of intense hype followed by deep downturns. Yet in 2025, cannabis ETFs are once again catching investor attention. A mix of shifting U.S. politics, global legalization momentum, and renewed discussions about banking reform has put marijuana-related funds back on the radar.

What makes cannabis exchange-traded funds (ETFs) attractive is the way they spread risk across multiple companies instead of relying on the success of just one. By holding baskets of stocks, these ETFs give investors exposure to U.S. multi-state operators (MSOs), Canadian cannabis producers, pharmaceutical innovators, and even ancillary businesses like real estate. This built-in diversification helps cushion volatility while allowing investors to capture upside if the industry grows.

Of course, cannabis is not yet federally legal in the U.S., which means progress is uncertain. Still, ETFs provide a more strategic approach than picking individual winners. Investors who want exposure to the space but prefer a professional, diversified strategy are finding cannabis ETFs appealing once again.

In short, 2025 could be a turning point. With ETFs positioned at the intersection of legalization headlines and investor sentiment, they’re becoming one of the most watched thematic investment categories of the year.

AdvisorShares Pure U.S. Cannabis ETF (MSOS)

The AdvisorShares Pure U.S. Cannabis ETF (MSOS) is the largest and most widely recognized cannabis ETF in the United States. It’s unique because it directly targets U.S.-based multi-state operators (MSOs), companies that operate dispensaries, cultivation, and distribution networks across multiple states. This provides direct exposure to America’s cannabis growth story, where the market potential is enormous—but so are the risks.

In early 2025, MSOS struggled. The ETF fell more than 30% during the first half of the year, dragged down by weak quarterly earnings and continued delays in federal legalization. However, volatility works both ways. By mid-summer, MSOS briefly became the best-performing equity ETF for the month, proving how quickly momentum can shift in this space.

MSOS is highly sensitive to news about legalization and reform. Any signs of progress on banking access, taxation relief, or rescheduling cannabis often lead to sharp rallies. But the opposite is also true: stalled political progress or disappointing earnings can send it tumbling.

For investors who want pure U.S. exposure, MSOS is unmatched. It’s bold, volatile, and not for the faint of heart—but it remains the go-to ETF for those betting on the future of legal cannabis in America.

Amplify Alternative Harvest ETF (MJ)

The Amplify Alternative Harvest ETF (MJ) holds the distinction of being one of the first cannabis ETFs to launch, giving it a historical advantage in branding and recognition. Unlike MSOS, which is focused almost entirely on U.S. companies, MJ offers global exposure, including large stakes in Canadian cannabis producers, pharmaceutical firms, and ancillary businesses.

This broad strategy can be both a strength and a weakness. On one hand, MJ benefits from international legalization trends. Europe, Latin America, and even parts of Asia are exploring medical cannabis frameworks, which could eventually boost MJ’s holdings. However, its significant exposure to Canadian companies has been a hindrance, as oversupply, regulatory obstacles, and sluggish retail expansion persist in undermining profitability.

Investors who want exposure beyond the U.S. often turn to MJ because of its “big tent” approach. It captures a wide range of cannabis-related industries, giving a more diversified picture of global cannabis than its U.S.-centric rivals.

Still, performance has been choppy. MJ may not deliver quick wins, but for those who believe cannabis growth will be a worldwide story—not just an American one—this ETF remains a core option.

AdvisorShares Pure Cannabis ETF (YOLO)

The AdvisorShares Pure Cannabis ETF (YOLO) is a standout because it is actively managed, unlike many cannabis ETFs that simply track indexes. This active approach allows the managers to adjust holdings based on industry fundamentals and market sentiment, providing flexibility in a volatile sector.

In 2025, YOLO has demonstrated why active management can be an advantage. In the second quarter, while many cannabis ETFs were sliding, YOLO delivered a 6.9% return, highlighting its ability to find relative strength in a struggling industry. By balancing U.S. multi-state operators with international cannabis stocks, the fund created a diversified and more defensive mix.

Another advantage of YOLO is its focus on quality over quantity. Instead of spreading assets across dozens of weaker players, YOLO concentrates on companies with better balance sheets, growth potential, or strong market positioning. This makes it appealing for investors who believe in cannabis as a long-term growth story but want professional oversight in choosing the best names.

The trade-off, of course, is cost. YOLO charges higher fees than passive ETFs, meaning investors pay more for management expertise. Whether this is worthwhile depends on how much value investors place on active strategy in a volatile market.

For those who want exposure to cannabis but prefer to rely on skilled managers rather than chasing headlines, YOLO offers a disciplined, curated way to participate in the sector.

Cambria Cannabis ETF (TOKE)

The Cambria Cannabis ETF (TOKE) takes a different approach than most cannabis funds. Instead of focusing exclusively on cannabis companies, TOKE invests in a broader range of related industries—including tobacco firms, alcohol producers, real estate trusts, and agricultural companies. This makes it a more conservative and diversified play.

While TOKE is smaller in size compared to MSOS, MJ, and YOLO, its unique blend of cannabis and adjacent industries helps reduce volatility. When cannabis stocks stumble, exposure to more stable sectors helps soften the blow.

This strategy has made TOKE appealing to cautious investors who want to participate in the cannabis growth story but are uncomfortable with the extreme volatility of pure-play funds. It hasn’t produced spectacular returns, but its steadier performance profile may make it easier to hold through downturns.

TOKE represents a measured approach. For long-term investors seeking exposure without taking on full cannabis risk, it could be a sensible complement to a diversified portfolio.

How Cannabis ETFs Are Performing vs. the Market

Even though people are looking at cannabis ETFs more closely in 2025, these funds are still not doing as well as standard measures like the S&P 500. Many are down double digits year-to-date, while broader markets have delivered steady gains.

The underperformance stems from several factors: lack of U.S. federal legalization, stiff competition among producers, heavy taxation, and oversupply issues in Canada. These headwinds weigh on the industry, making it difficult for cannabis ETFs to keep pace with more established sectors.

Still, cannabis ETFs occasionally shine during bursts of momentum. News about legalization progress, court rulings, or favorable state-level policy changes often sparks short-lived rallies. This creates opportunities for tactical investors who are willing to trade around volatility rather than hold long-term positions.

In the big picture, experts often recommend treating cannabis ETFs as satellite holdings—small, tactical allocations that complement a diversified portfolio rather than anchor it. This way, investors can capture potential upside without exposing themselves to too much risk.

Investor Sentiment: What Reddit and Retail Traders Are Saying

Retail investors remain divided about cannabis ETFs. On Reddit communities like r/weedstocks, many argue that ETFs carry too much “dead weight.” They believe the funds include too many underperforming companies, dragging down returns. One user summarized it bluntly: “Don’t buy ETFs—just pick the top MSOs directly.”

At the same time, others value ETFs for the risk management and diversification they provide. With cannabis stocks so unpredictable, ETFs reduce the danger of betting everything on one company that might fail. For new or cautious investors, ETFs can feel like the safer entry point.

Interestingly, TOKE has earned some respect in retail circles for its balanced, fundamentals-based approach. Traders note that while it may not generate explosive gains, it also avoids some of the extreme losses seen in pure-play funds.

Overall, retail sentiment reflects the industry itself: polarized and volatile. While some investors prefer concentrated bets, others see ETFs as the smartest way to survive the unpredictable cannabis rollercoaster.

Quick Comparison of Top Weed Stock ETFs in 2025

 

MSOS is for those betting big on U.S. legalization. MJ is broader, giving international exposure but weighed down by Canadian challenges. YOLO brings active management and better short-term performance but comes at higher fees. TOKE is a calmer, defensive option for investors who want cannabis exposure without maximum risk.

This table makes it clear that no single ETF is perfect. Instead, the choice comes down to risk tolerance, time horizon, and how much weight an investor wants to place on U.S. versus global markets.

Is It Smart to Invest in Weed?

So,should you put your money into cannabis in 2025?.The answer is: it depends on your risk appetite. Cannabis remains a highly speculative sector, still waiting on U.S. federal reform for true growth potential. Without legalization, many companies face steep taxes, limited banking access, and financing hurdles.

Yet, the opportunity is undeniable. If legalization progresses, the cannabis market could unlock billions in new revenue streams. ETFs provide a way to participate in that growth without trying to pick individual winners.

The key is allocation.Financial experts usually suggest that you should keep your cannabis investments between 5 to 10% of your overall portfolio. This ensures you can benefit from upside while keeping risk under control.

For aggressive investors willing to handle volatility, cannabis ETFs are still compelling. For conservative investors, the risks may outweigh the potential.

Final Thoughts: Should You Invest in Cannabis ETFs This Year?

Cannabis ETFs are among the most volatile but fascinating thematic investments of 2025. They’re not for everyone, but they provide a unique way to invest in an industry that could experience rapid transformation if U.S. reform gains traction.

For bold investors, MSOS and YOLO deliver the most upside potential, though they come with sharp swings. For cautious investors, TOKE offers a steadier entry, while MJ balances global exposure with long-term potential.

The bottom line is this: cannabis ETFs are best used as tactical investments, not core holdings. By allocating a small percentage of your portfolio, you can capture potential upside without risking too much.

In 2025, cannabis remains a “watch and wait” story. But for those willing to ride the highs and lows, weed ETFs are still one of the most intriguing plays in the market.