New proposed federal rules governing marijuana have so far failed to spark fresh buying interest in exchange-traded funds (ETFs) tracking the shares of North American cannabis companies, despite strong performance this year.

Marijuana ETFs and cannabis stocks shot higher last week after the U.S. Justice Department said it plans to reclassify marijuana as a less dangerous drug. Big gainers included the Roundhill Cannabis ETF, AdvisorShares Pure Cannabis ETF and Amplify U.S. Alternative Harvest ETF, which are all sitting on year-to-date gains of 29.6% to 36.6%, putting them among the top ETF performers of 2024.

However, the gains are yet to translate into asset growth for many of the funds - suggesting ETF investors are wary about placing new, sizeable bets on the sector.

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Of the nine cannabis-focused ETFs in the U.S. market, only two - the AdvisorShares MSOS 2x Daily ETF and the AdvisorShares Pure US Cannabis ETF - have seen any inflows since the Justice Department's announcement, according to data from LSEG Group.

"The runups we've seen have been driven by cannabis-focused investors who have been waiting for this news but who already have money in a handful of their favorite stocks," said Steve Sosnick, market strategist at Interactive Brokers.

Some analysts believe the wariness of ETF investors to dive into cannabis funds could mean a shakeout is looming for the segment. Already this year, GlobalX Funds has shuttered its $29 million GlobalX Cannabis ETF. GlobalX has declined comment on the closures, but analysts noted that those ETFs that were axed had been slow to accumulate significant assets.

"This is a relatively crowded niche offering," said Todd Rosenbluth, head of research at Vetta Fi. "If demand fails to materialize in 2024, we could see additional closures."

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But analysts also said the funds could start drawing money if the Justice Department proposal to reclassify cannabis tempts a new wave of investors to focus on the industry.