It is often said in the exchange traded funds (ETFs) business that “all of the good ideas are taken.” Well, maybe not. The legal marijuana industry is booming in the U.S. and, until now, there hasn't been a dedicated ETF on the market, but funds are starting to catch up with the trend. The first dedicated marijuana ETF started trading on April 5th, 2017.

In February ETF Managers Group (ETFMG), a New Jersey-based company that helps ETF sponsors bring their products to market, filed plans for the Emerging AgroSphere ETF. Assuming the Emerging AgroSphere ETF comes to life, it will track an index created by BE Asset Management. On March 28th, Horizons ETFs announced that Horizons Medical Marijuana Life Sciences ETF (HMMJ) had been conditionally approved for listing by the Toronto Stock Exchange, and began trading April 5th for $10 per share. The ETF has an expense ratio of 0.75% and is currently trading for $10.84 (as of April 10th, 2017).

The new ETF replicates the performance of  the North American Medical Marijuana Index, as will the Emerging AgroSphere ETF. The Index is designed to provide exposure to the performance of a basket of North American publicly traded companies with significant business activities in the marijuana industry. 

Interested investors should note that both funds, again assuming both hits the market, will focus on medical marijuana. That means the ETF will not be a play on the highly lucrative recreational marijuana markets that are popping up across the U.S. Colorado is generating handsome tax revenue from legal recreational marijuana and the same could hold true for other states in the future. For example, during the 2016 elections, Californians voted to legalize marijuana for recreational use, and the largest U.S. state by population will see its first recreational pot stores open in 2018.

"Currently, 28 states plus the District of Columbia have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis and consumer use of cannabis in connection with medical treatment," according to a ETFMG filing with the SEC. "Even in those states in which the use of medical marijuana has been legalized, its sale and use remains a violation of federal law."

Unlike Horizons Medical Marijuana Life Sciences ETF (HMMJ), the ETFMG filing did not contain a proposed ticker or expense ratio for the marijuana ETF. Those are often signs that a new ETF is close to coming to market, so it could be a while before investors can access the Emerging AgroSphere ETF.