The ETFMG Alternative Harvest ETF (NYSEArca: MJ) is struggling this year. California, a state that was seen as a potential help to MJ and marijuana equities, is playing a part in the exchange traded fund’s woes.

California was one of the first states to legalize marijuana for medicinal use. The largest U.S. state followed that up on Election Day 2016 by finally voting to legalize marijuana for recreational use. Some industry observers believe California will be a major driver of the U.S. marijuana industry in the years ahead.

Remember that MJ converted into a marijuana ETF, the only such fund trading in the U.S., in late 2017, just days before it became legal for recreational marijuana retail stores to open in California. Yet the fund is down more than 18% year-to-date.

MJ’s underlying index may cover businesses that are legally engaged in activities related to cannabis, the benchmark does not include those that directly cultivate, produce or distribute marijuana or products derived from marijuana, unless such activities become legal under U.S. federal and state laws.

Related: Leveraged Marijuana ETFs Could Debut in Canada

Problems Galore for Recreational Weed

Recent data points suggest California’s high taxes on legal recreational weed and burdensome regulations are hindering the state’s legal marijuana business.

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