Popular marijuana stocks fell across the board Wednesday, paring extreme gains so far this year, as investors cashed in a bit of their bet as Canada became the largest country to legalize the recreational use of cannabis.
After months of political haggling and legal debate, Canada joined the U.S. states of California, Massachusetts, Maine, Alaska, Colorado, Washington, Nevada, Vermont and Oregon as the first Group of Seven country to OK adult use of pot. The major cannabis stocks ran up in anticipation of this day and offered investors on Wednesday a reminder of just how volatile some of the young pot companies have become amid a flurry of news and speculation.
Medical marijuana company Tilray, whose stock has posted a meteoric rise on the Nasdaq since its initial U.S. offering in July, shed more than 6 percent Wednesday. Canopy Growth, another favorite in the space, lost 3.5 percent on the New York Stock Exchange. Tilray is up 750 percent from its IPO price of $17 while Canopy is up about 100 percent since mid-July.
Some members of Wall Street’s cannabis community cautioned that the rapid rise in pot stock prices could be followed by modest sales in the early innings of legalization, including the top analyst in the space.
“While the opportunity is large, the market is going to develop in phases both in terms of product availability as well as retail access points,” Cowen analyst Vivien Azer told CNBC in an interview Tuesday. “For product availability on day one it’s going to be pretty limited: no traditional vapor products, beverages or edibles. That could take as much as a year.”