When you check out the constituent makeup of the 11 publicly traded "marijuana" ETFs (listed below) you will notice that they include a large percentage of pharmaceutical, real estate, grower supply, and tobacco/spirit companies. How can that be?

Shouldn't the ETFs consist of baskets of true marijuana stocks that reflect the performance of the industry sector-based, albeit, with differing listing criteria? Below is a look at what these supposed "cannabis" ETFs consist of and why it is virtually impossible to compare their respective performances.

Here's what is behind their subtle misdirection. In an attempt to put together a basket of stocks in the cannabis sector that will do well and, therefore, attract investors, most ETF managers have taken major liberties with the definition of a "marijuana" company.

• Since when is a pharmaceutical company a marijuana company because it has a product under development that has some cannabis in its formulation?
  • 9 of the 11 cannabis ETFs do just that and they are doing so to juice their respective performances.
    • The marijuana market is DOWN 27% YTD according to the pure-play Non-penny Pot Stock Index so having pharmaceutical companies like
      • GW Pharmaceuticals (GWPH)(+21% YTD);
      • Corbus (CRBP)(+44.9% YTD);
      • Arena (ARNA)(+39.8% YTD);
      • Cara (CARA)(+9.0% YTD)
      • and XPhyto (XPHYF)(+209.3% YTD)
    • make my point.
•  Since when is a REIT a marijuana company? Sure, all its properties might be leasebacks of the facilities of marijuana cultivators but they are, first and foremost, real estate investment trusts with all the advantages that such security entails. Innovative Industrial Properties Inc. is a case in point and no wonder it is included in 4 of the 11 marijuana ETFs - it is UP 30.2% YTD vs. a decline of -27% YTD for the pure-play NPSI.
• Since when is a fertilizer supply company (i.e. Scotts Miracle-Gro) that has a product that contains cannabis considered a marijuana company or a company that provides gardening supplies and hydroponic equipment (GrowGeneration)? When their stocks are performing well (+31.7% YTD and 64.6% YTD respectively).
• Since when is a tobacco, liquor, or beer company a marijuana company just because it has invested in a marijuana company?

As I see it, only one of the 11 ETFs discussed below qualifies as a true cannabis ETF. The other 10 are pretenders. The percentages below depict to what extent the top 10 constituents in each ETF represent as a percentage of the total:

1. Pure Cannabis ETF (YOLO)

• Pharmaceutical companies - 13.6%
• Real Estate Investment Trusts - 9.4%

2. Amplify Seymour Cannabis ETF (CNBS)

• Pharmaceutical companies - 23.3%
• Real Estate Investment Trusts - 6.4%
• Growing Supply/Equipment companies - 6.5%

3. Cambria Cannabis ETF(TOKE)

• Pharmaceutical companies - 10.7%
• Tobacco/Liquor companies 16.6%
• Growing Supply/Equipment companies - 6.3%

4. ETFMG Alternative Harvest ETF (MJ)

• Pharmaceutical companies - 17.8%
• Tobacco companies - 3.2%

5. The Cannabis ETF (THCX)

•  Pharmaceutical companies - 6.7%
• Growing Supply/Equipment companies - 12.1%

6. Global X Cannabis ETF (POTX)

• Pharmaceutical companies - 14.2%

7. Horizons Marijuana Life Sciences Index ETF (HMMJ)

• Pharmaceutical companies - 9.9%
• Growing Supply/Equipment companies - 8.4%
• Real Estate Investment Trusts - 3.1%

8. AdvisorShare VICE ETF (ACT)

• Beer/Wine/Spirits companies - 32%
• Tobacco companies - 22$
• Restaurants/Casino companies - 16%
• Cannabis companies - 30%

9. Horizons US Marijuana Index ETF (HMUS)

• No non-pure constituents

10. Horizons Marijuana Companies 2X Daily Bull ETF (HMJU)

• Pharmaceutical companies - 22.1%

11. Horizons Marijuana Companies Inverse ETF (HMJI)

• Pharmaceutical companies - 22.1%

You can see from the above that the 11 ETFs differ considerably from each other and, as such, each index presents a different picture of what is supposedly happening in the cannabis marketplace. So what's an investor to do? If you want to invest in a true marijuana ETF you really only have one choice, the Horizons US Marijuana Index ETF (HMUS) which concentrates exclusively on U.S. multi-state operators (MSOs).

If you are more interested in just having a clear picture of what is happening in the cannabis sector without the misleading inclusion of non-marijuana companies masquerading as marijuana companies (marginally-related at best) then I suggest you follow the almost daily postings on TalkMarkets (see here) of the equal-weighted, pure-play (hands-on), non-penny pot stock index (NPSI).