Should I Buy a Marijuana ETF?

marijuana ETFShould I buy a marijuana ETF? On Feb. 16, the ETF Managers Trust filed paperwork for what would be the first marijuana-based ETF.

According to the paperwork, the marijuana ETF would invest in medical marijuana companies that produce or sell products from hemp. The ETF would also be listed as Emerging AgroSphere ETF.

And for risk-averse investors, this could be the safest way to play the booming $6.7 billion marijuana industry in North America...

The Benefits of Investing in a Marijuana ETF

Want to Invest in Weed and Don’t Know Where to Start?

Well over half of the country already has marijuana legally available in some form. Eight states plus our nation’s capital have made it completely legal to anyone over the age of 21. And the marijuana stock market is preparing to take off. Watch this short video and see whether jumping on this moon-bound stock rocket is right for you.

A marijuana ETF would provide diversification, which limits the risks associated with owning just one cannabis stock.

As an example, let's say a marijuana ETF holds three stocks: OrganiGram Holdings Inc. (OTCMKTS: OGRMF), Canopy Growth Corp. (OTCMKTS: TWMJF), and Mentor Capital Inc. (OTCMKTS: MNTR).

The OGRMF stock price is down 14.88% in 2017. But so far in 2017, the TWMJF stock price has climbed 19.06%, and the MNTR stock price has climbed 116.04%.

That means even though OGRMF is down for the year, the average return of those 3 stocks is over 40%.

And while the ETF provides more diversification than investing in just one stock, it's still easy to invest in. The ETF will have a ticker symbol just like a regular stock, and investors can monitor daily price changes. An ETF also allows investors to trade options, just like a regular stock.

Unfortunately, we don't have any updates about the filing right now.

But through our free Profit Alert service, we will update Money Morning readers with new developments for this marijuana ETF.

Plus, there's still a way to play the booming marijuana industry for risk-adverse investors right now.

While this isn't a firm recommendation, this new opportunity is expected by analysts to provide returns of nearly 40% in the next year. Remember, marijuana investing is still speculative.

That's why we wanted to make sure it was on your radar...

How to Play the Marijuana Industry in 2017

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One of the safest ways to play the marijuana industry is through Innovative Industrial Properties Inc. (NYSE: IIPR).

Innovative Industrial Properties targets medical-use cannabis facilities for acquisitions. It also targets sale-leaseback transactions where current tenants are licensed growers under long-term triple-net leases.

"By selling the property and building to us, and then leasing it back from us, growers are able to redeploy the proceeds into their company's core operation and yield a higher return than they would otherwise get from owning their own real estate," Innovative Properties said on its website.

It intends to conduct business in an umbrella partnership real estate investment trust (UPREIT).

This means IIPR profits from the marijuana industry without ever buying or selling cannabis. And because IIPR is only working with companies in the medical cannabis sector, it's less risky than working with recreational marijuana companies.

That's because investors are still unsure what U.S. Attorney General Jeff Sessions means for the marijuana industry.

Right now, the UPREIT doesn't own any properties.

However, Innovative listed in its IPO filing that it plans to buy a $30 million, 127,000-square-foot property in Montgomery, N.Y., according to CNN.

The company also plans to use the $67 million it raised in its Dec. 1, 2016, IPO to purchase properties in states where it's legal to cultivate medical marijuana.

Now, it's true the IIPR stock price is now down 20.54% from its Dec. 1, 2016, opening price of $20.25. And it's also true IIPR doesn't have any current leasing tenants, which means it's not generating revenue.

But when IIPR does acquire properties and closes in on its Montgomery, N.Y., transaction, it will be a pot stock to watch.

Even without these deals, FactSet has a one-year price target of $22.50 for the IIPR stock price. From today's opening price of $16.09, that's a potential profit of 39.83%.

You see, the vote across America for marijuana legalization is expected to create one of the biggest wealth grabs in history, transforming everyday Americans into millionaires overnight.

marijuana ETF

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