The changes taking place around marijuana for medical use and for recreational use are the biggest in almost everyone’s lifetime. There are quite literally billions of dollars up for grabs for those who capitalize on the trend. There are also significant risks, both for investors and those who decide to get into the business. We might not be able to help those in the business with banking, tax, legal and security tips, but we do have a thought for the community who wants to invest passively in the massive growth potential of marijuana: How about a marijuana ETF!

An old saying that we keep using is that there is an exchange traded fund (ETF) for just about any investing theme you can think of. Still, marijuana is a relatively new legal industry regionally, with very few legitimate public companies in the sector that have generated revenues and that have been run by officers who know what it takes to be a public company.

A marijuana stock ETF may be quite a ways off. There are only two states with legalization in place, and we have identified the next nine states with efforts underway for 2014 to 2016 legalization. An ETF would aim to filter out all the penny-stock scam marijuana company risks to buffer investors and would set up criteria for how investors should evaluate them.

Before you think that this idea of a marijuana ETF is too outlandish to consider, look elsewhere at many of these crazy niche sectors. There are ETFs that mimic merger-arb investing, rare earths metals, lithium producers, companies run or dominated by women, uranium, wind energy, livestock and on and on. So, why would a marijuana ETF be out of the ordinary?

ALSO READ: America’s Most Unusual Public Companies

It seems likely that whichever fund family would launch a so-called marijuana ETF would not just be able to limit the focus to U.S.-only companies. That is common enough in ETFs.

Now, keep in mind that both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have both gone as far as to issue formal warnings about marijuana stock and investing scams. Again, this means an ETF could buffer investors against the penny-stock scammers.

Companies that would be included in any serious ETF would likely be limited to legitimate reporting companies. Some of these companies included in an ETF would almost certainly be companies that service the marijuana industry but that are much larger and focus on farming and cultivating throughout the broader agricultural sector.

We have named some large companies in existence now that are fully reporting and could see a boost from marijuana’s legalization. We should warn that some companies, even some named, may choose to look elsewhere rather than directly target the industry. Also, some smaller companies, named and unnamed, could easily face questionable futures — perhaps very questionable futures.

GW Pharmaceuticals PLC (NASDAQ: GWPH) is a U.K.-based biotech company most tied to medical uses for commercializing cannabinoid prescription medicines. This is not a medical marijuana company but a company that uses parts of the product to make drugs for pain, epilepsy and other indications. It is worth more than $1.5 billion already and its Sativex lead product has the equivalent of FDA approvals in more than 20 countries (not yet in the United States, but the FDA has given the company one positive nod). This company was even recently named in our own list of the most unusual public companies.

What about the ticker POT — for Potash Corp. of Saskatchewan (NYSE: POT)? This is not a pot company, but it would be one of potentially many players in potash, fertilizer and additives that would be used by pot growers. Our warning is simple here though: it seems unlikely that it would see even a 1% boost in revenue.

Lindsay Corp. (NYSE: LNN) makes irrigation systems designed to boost agricultural production while also conserving water. Sounds like a weed grower’s dream, but again it seems unlikely that the company would see even a 1% revenue bump from a marijuana growers’ revolution.

One ETF inclusion would be a so-called hemp-friendly bank, which is yet to be determined. Federal laws and regulations still make the business of marijuana almost impossible to bank on. It is currently a high-cash business. You know that one bank will be the first to embrace the industry, and marijuana entrepreneurs and store owners almost certainly will flock to that bank. Again, this bank is a draft to be announced at a later date.

Then there is the OTC stock involved in dispensing and vending machines that soared to Pluto and came crashing back down to earth. This is MedBox Inc. (MDBX), but we would warn even further than the meteoric stock drop — it was pleased to announce just on July 1, 2014, that it was now a fully reporting public company.

If you don’t trust us on how risky this sector is for investing, then we want you to read a piece centered almost entirely around warnings from another industry watcher. MarketWatch’s Cody Willard just did a great piece on the warning about the potential capital destruction that can take place in the so-called penny stocks around the emerging marijuana sector.

ALSO READ: The Next 9 States to Legalize Marijuana

Then there is the Marijuana Stocks website, with some 19 stocks listed as “public” companies, though only three of the stocks trading above $1.00 as of July 22. Again, beware the underlying risks in the OTC stocks, unless you are comfortable risking all of your capital on companies without reporting histories and without longstanding operating reputations. If these companies make the leap from OTC and Pink Sheets into reporting companies with real assets and real operating histories, then you could expect that some might get included.

Update July 23: Another focal point for possible inclusions of companies in any Marijuana ETF would be the so-called MarijuanaIndex (dot-org). This “index” includes more than 40 public companies. We would be quick to point out that GW Pharma is on that list, but the overwhelming majority of the public companies listed here would fall under the penny stock category. Many are thin in average daily volume. Not even one-fourth of the names were indicated to have market capitalization rates north of $100 million — sending these all to the microcap stock heap.

Keep in mind that there is much higher risk in any company tied to business operations around marijuana or any other emerging “sin business” outfit. Most investors are not too fond of SEC filings indicating that they are under reviews of the DEA, FDA, IRS, state tax agencies and local law enforcement. Keep this is mind going forward, because the “risk factors” will be significantly higher than companies such as public retail clothing stores.

Stay tuned, and please do not forget the term “caveat emptor” when it comes to anything remotely tied to investing in the emerging field of legalized, recreational and medical marijuana.

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