The marijuana industry, and marijuana stocks for that matter, have been worth marveling at recently. A majority of marijuana stocks have doubled or tripled in value over the past year as legal weed sales in North America jumped by 34% last year to $6.9 billion, according to cannabis research firm ArcView.

But this could be just the tip of the iceberg. ArcView is also predicting North American legal sales growth of 26% per year through 2021, yielding a market worth nearly $22 billion. The possible legalization of adult-use weed in Canada, along with the recent legalization of medical cannabis in Mexico and the expectation that more U.S. states will choose to green-light recreational pot, has the industry and investors extremely excited.

A person holding cannabis leaves in their cupped hands.

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The first-ever marijuana ETF was introduced in Canada

Of course, investing in pot stocks isn't without its fair share of risks. After all, marijuana is still illegal for recreational use in every country except Uruguay. Within the U.S., all it would take is for the federal government to decide to reinforce its superseding law and the 29 states that've legalized medical cannabis, and eight that voted to legalize recreational weed, could see their industries go up in smoke. In other words, buying individual marijuana stocks comes with a ton of inherent risks.

Unfortunately for U.S. investors, diversified investment options, like an exchange-traded fund (ETF), haven't really been an option. Earlier this year, the Horizons Marijuana Life Sciences ETF (TSX:HMMJ) made its debut on the Toronto Stock Exchange, and has risen about 19% since inception. It seeks to replicate the performance of the North America Marijuana Index, net of expenses, and for a reasonably low management fee of 0.75%, plus applicable taxes, this ETF gives investors access to 21 different marijuana stocks. 

It's worth pointing out that the Horizons Marijuana Life Sciences ETF largest holdings are in Canadian medical cannabis growers Canopy Growth Corp., Aurora Cannabis, Aphria, and MedReleaf, which make up just shy of 46% of its invested assets. Since Canada's parliament is currently reviewing a bill that'd legalize recreational pot in our neighbor to the north, this is a big reason why this ETF has done so well.

On the flipside, U.S. investors have been wondering when they might get their opportunity to invest in a marijuana-themed ETF. Well, folks, that wait is coming to an end.

A cannabis bud lying atop a messy pile of hundred dollar bills.

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Say hello to the very first marijuana ETF for the U.S.

As reported by CNBC, on Oct. 27, ETF Managers Group filed for a new ETF, the Alternative Agroscience ETF. This ETF will mimic an index as closely as possible that tracks cannabis cultivators, producers and distributors, cannabinoid drugmakers, fertilizer producers, and tobacco companies.

But there's an interesting catch behind its "inception." The Alternative Agroscience ETF won't really be a new ETF at all. ETF Managers Group is switching the focus and tracking index of an existing ETF, the Tierra XP Latin America Real Estate ETF (NYSEMKT:LARE), which tracks the Solactive benchmark of real estate in Mexico and Brazil, to an ETF that predominantly follows cannabis companies.

Why make the switch? One possible theory is that the Latin American Real Estate ETF, while the only one of its kind, never quite caught on with investors. The ETF had only $6 million in assets and an average daily volume of roughly $90,000. That's not exactly going to cut it when there are countless ETFs for investors to choose from. Plus, switching to a new focus from an existing ETF, rather than bringing a new issue to market, is cheaper for ETF Managers Group.

Building on the previous point, another reason for the switch could be the first-mover advantage. Since there aren't any marijuana ETFs for U.S. investors to buy, refocusing a fund that's struggling to grow its assets would make sense. There's clearly a lot of money flowing into the weed industry, and ETF Managers Group is hoping it can capitalize on that trend by catering to this demand.

According to a Securities and Exchange Commission filing, the switch to a cannabis-based index will occur on Dec. 26, so there's still a few weeks to go before investors will have an ETF that truly tracks marijuana stocks. 

A person holding up a puzzle piece with a question mark drawn on it.

Image source: Getty Images.

Should you buy this new pot ETF?

But the big question is: Should you jump on this opportunity to diversify across a broader swath of marijuana stocks on or after Dec. 26? My suggestion would be that you wait.

There are a lot of unknowns here, and it could adversely affect your hard-earned money if thrown into the Alternative Agroscience ETF. Namely, we don't what's going to happen with Attorney General Jeff Sessions, who's been an ardent opponent of pot's expansion for a long time. Sessions hasn't minced words about cannabis, and in May tried to coerce a few of his fellow lawmakers on Capitol Hill to repeal the Rohrabacher-Farr Amendment, which protects medical marijuana businesses in legal states from federal prosecution. With rumblings ongoing for months that a change or tightening in federal policy could be coming, investing in pot stocks could be downright dangerous.

This and the ongoing losses that most pot stocks are producing aside, it's also a bit unnerving, per CNBC, that neither the current ETF or Tierra Funds' website mentions this impending change in focus. It's only mentioned through a Securities and Exchange Commission filing.

In other words, we don't know what sort of reaction the market will have to this sudden shift in focus, or if investors will even be aware of it at this point. We also don't know what or how many stocks will be purchased, what their weighting will be, and how high the annual expense ratio will be. About the only certainty is that stocks trading for less than $1 a share, below $50 million in market cap, and with poor liquidity, will be excluded. But that's not saying much. 

For the time being, the safest place for investors is on the sidelines.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.