There’s been a lot of nervous anticipation among many with the arrival of the new Horizons Medical Marijuana Life Sciences Exchange Traded Fund (HMMJ.T), or ‘The Weed ETF’ as most are referring to it.

This is a big deal for the North American weed space, to be sure, and not before time. With so many billions tied up in legit weed plays north of the border, and more still tied up in the greymarket to the south, not to mention biotech weedery, vertical integrators, brand plays… Really, it’s silly to continue to treat the space like it’s not a legitimate part of the financial markets.

And if anyone is going to do it innovate in this way, Horizons will be the ones to do so. They’re a big player, with some $7 billion under management.

And they’ve beaten out a competitor in getting this going quickly, with the ridiculously put together and shitball-filled ETF Managers Group Cannabis Emerging Agrosphere ETF on the planning board for a little too long to get firsties.

But is it worth your dollar? Weed analyst Alan Brochstein broke down the details pretty well last week.

Take it away, Broch:

The North American Medical Marijuana Index tracks the performance of a basket of North American publicly listed companies with significant business activities in the marijuana industry. A company is deemed to be eligible for inclusion in the index by the Index Provider if the company is a producer and/or supplier of medical marijuana and/or medical cannabis, biotechnology companies that are engaged in research and development of cannabinoids, companies that offer hydroponics supplies and equipment clearly aiming to increase efficiency in marijuana cultivation and companies mainly engaged in leasing property to medical-use cannabis growers.The index is calculated as a gross total return index in CAD and adjusted quarterly.

The fund will be rebalanced quarterly, with weighting capped at 10% during that rebalance. Nothing gets in unless the company is valued at $75m, minimum monthly daily value traded of $250K and minimum average monthly daily volume shares traded at 75K.

So what’s in the Horizons ETF? Mostly what you’d expect, with some strange additions. Frankly, this is the ETF you’d expect to happen if you asked your grandfather to make one.:

The big LPs: Canopy Growth, Aphria, Supreme, Aurora, Organigram, Emblem, Cronos, Cannimed

The less big LPs (or LP wannabes): ICC International Cannabis Corp, Maple Leaf Green World, and Emerald Health

Biotech plays: GW Pharma, Insys, Zynerba

Suppliers, kinda: ScottsMiracle-Gro

Branding plays: CannaRoyalty

A couple of NASDAQ deals, some CSE roughage, some companies that I wouldn’t go near with a hazmat suit (whats up, Insys?), some that almost don’t touch weed but, hey, market cap (what’s up, ScottsMiracle-Gro).

My thinking on this is, I wouldn’t invest in it, frankly. The top end of the market is the end of the market where a lot of value has already been reached. Will Canopy double from here? Less likely than Invictus. Will ICC make millions supplying weed to a few million Uruguayans with $1 per gram price caps? Probably not so much, at least not in a way that isn’t already baked into its share price. Maple Leaf Green World? Oy.

Frankly, this is Weed For Dummies, with mainly growers and a few showers.

Think about what’s coming soon, that wont be a part of this: AbCann. DOJA. Green Organic Dutchman. Invictus just notched a licensed LP and I’m hearing about a few others on the way that will be very intriguing, some growers and some brands and some more interesting biotech than a couple of overpriced companies that are trying to make synthetic weed. They’ll all be an opportunity to make big upside by getting in early, but they won’t get near that ETF until they’ve tripled and quadrupled into the minimum market cap/trading.

The only reason to play this ETF will be if you think big LPs are going to jump and you want to save the commission on trading the top 5. Otherwise, the only real value to it, for mine, is it will bring institutionals deeper into the sector (because, easy), and it will see some increased volume on the stocks mentioned as they’re bought into the basket.

Otherwise… meh.

The alternate weed ETF is another story. Extremely thick with tickers – some 65+ in all – from all sorts of weird sub-sectors. If you just want to flood the zone, that’s going to be your go-to. But be warned – for every interesting innovator you’re picking up, you’re also picking up an Abbatis or an Easton or, god only knows what level of OTC chicanery.

When we get into the weed sub-sector ETFs, then we’ll be in business. If I can buy an oils ETF or a edibles ETF, I’m all over that. But we’re not there yet. Big shrug.

— Chris Parry