Those who want to hold a niche industry ETF like this one must know that anything can happen in the short term, said Todd Rosenbluth, director of ETF and mutual fund research at CFRA Research. Thematic ETFs, especially ones that cover young industries, could see ups and downs as the sector works its way through its growing pains, he said.
"It can't just be an interesting concept," Rosenbluth said, though he could not provide commentary specific to the new marijuana ETF. "The narrower the investment theme, the more can go wrong if demand for the underlying securities doesn't materialize."
Hawkins said that investing in this industry is a high-risk, high-reward proposition. While companies are maturing, the sector is at the whim of governments and it's still unclear what rules and regulations will be placed around the sale of pot.
With a 0.75 percent expense ratio, Brochstein said this ETF may be better for investors who want to put smaller amounts of money into the sector. Put too much and the fee, plus any transaction fees, starts to add up. "It can be expensive if you have a lot of money in it," he said.
Horizons is marketing the ETF to do-it-yourself investors rather than investment advisors and says there's been more interest in this product than any other ETF the company has ever put out. Hawkins says it's for people who want to add a growth sector to an already diversified portfolio and for those who think long-term. "You don't have to be a marijuana user to be able to want to invest in this," he said. "It's for people who can see the growth prospects of the industry."
Despite his concerns, Brochstein is positive on the ETF. "The need for a stock vehicle is great. And the market has matured now to where it makes sense to have one," he said.
Hawkins compares companies in the marijuana industry to the early stage internet operations of the 1990s. "It's a young industry, and it's evolving daily," he said. "It has the growth that internet companies once did."
Put that in your pipe and smoke it.
— By Bryan Borzykowski, special to CNBC.com