Marijuana stocks were on a tear last year, and big industry names like Canopy Growth (CGC - Free Report) , Tilray (TLRY - Free Report) , Cronos (CRON - Free Report) , and Aurora Cannabis (ACB - Free Report) were reaching new highs thanks to Canada legalizing recreational cannabis and rampant bullish sentiment.
2019, though, has sent stocks tumbling back down to Earth, with many companies losing half their value over the trailing year. What happened?
One of the biggest reasons is a supply shortage, as a lot of Canadian growers waited too long to expand their capacity. There’s also the issue of cultivation and processing application backlogs, as well as high tax rates in the U.S. and a significant delay in the launch of the derivatives market (derivatives are products like edibles, vape pods, and infused beverages. Plus, there’s the regulatory and accounting issues that have left investors cold.
It will likely take a long time before Wall Street trusts marijuana stocks again, and despite expected growing pains and being the “next big thing,” investing in marijuana stocks will continue to be a bumpy ride.
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