The Amplify U.S. Alternative Harvest ETF has a significant allocation to cannabis-related companies like Green Thumb Industries (OTC:GTBIF) and Curaleaf Holdings (OTC:CURLF). The fund’s price has eroded more than 50% over the last year as the cannabis sector continued to struggle with regulatory issues.

A key reason behind the unsteadiness in the cannabis industry — and funds like MJUS — is the Drug Enforcement Administration’s role in maintaining marijuana’s classification as a Schedule I drug under the Controlled Substances Act, a categorization reserved for substances with no medical use and a high potential for abuse. This has led to limitations on research, banking and taxation for cannabis businesses.

Although the U.S. Department of Health and Human Services recommended rescheduling marijuana to Schedule III, which would ease some federal restrictions, the DEA has the final say. The agency's cautious stance on cannabis rescheduling and the uncertainty around the decision is impacting investor confidence.

MJUS is not alone in facing these challenges. ETFs with high exposure to cannabis stocks are also struggling from weak financial performance to limited capital access. The DEA's lack of action has left cannabis firms, and the funds that track them, vulnerable. Funds like AdvisorShares Vice ETF (NYSE:VICE), Cambria Cannabis ETF (BATS:TOKE) and Roundhill Cannabis ETF (BATS:WEED) did not have their best year in 2024.