The first marijuana exchange-traded fund has reached a milestone that has as much to do with surging pot stocks as it does with investor inflows.

The Horizons Marijuana Life Sciences Index ETF’s total assets have grown to more than $1 billion as shares rallied 124 per cent since its April 2017 debut on the Toronto Stock Exchange. It’s the first cannabis-focused fund to break the billion-dollar mark. Known by its ticker HMMJ, the ETF has benefited from burgeoning investor demand for pot stocks.

“HMMJ’s growth has far exceeded our expectations as investors have strongly supported the sector in anticipation of Canada’s upcoming recreational marijuana legalization,” Horizons Chief Executive Officer Steve Hawkins said in a statement. Canada will legalize recreational use on Oct. 17.

Enthusiasm for the fund appears to have cooled somewhat last month, however, as investors pulled money out in six of the the seven trading days between Aug. 21 and Aug. 29. They withdrew a total of $15.9 million over that stretch before plowing $14.1 million back in on Aug. 30, bringing the month’s total inflows to $12 million.

Meanwhile, buyers in the U.S. have been scooping up shares of the US$436 million ETMG Alternative Harvest ETF, known by its ticker MJ. It took in more than US$30 million August, its largest monthly inflow since January.

Pot stocks have been surging since mid-August, when Corona beer maker Constellation Brands Inc. (STZ.N) invested $5 billion in Canopy Growth Corp. (WEED.TO), a signal that mainstream companies are beginning to see the potential in cannabis. Canopy, the second-largest holding in HMMJ, has seen its stock price more than double since the deal was announced. HMMJ has gained 54 per cent over the same period.

HMMJ invests in life sciences companies with significant activities in the marijuana industry. Its holdings include major cannabis producers as well as ancillary businesses like Scotts Miracle-Gro Co. (SMG.N)

With assistance from Carolina Wilson