The legalization of recreational marijuana in Canada beginning Oct. 17 has cast marijuana stocks into a limbo on Monday, Oct. 22. Market analysts are sensing the continued decline of cannabis stocks sessions in the next eight months impact of full legalization in Canada spreads across markets.
Marijuana stocks had been soaring high in the months that lead up to Canada's official legalization of recreational cannabis. A number of investors had ventured in different companies with as much as billions-worth of investments. These investors may have been taking profits now and more are set to sell their shares, hence, the ongoing tumble in marijuana share prices. Investors are expected to continue reaping profits of their high bids prior to the legalization as they also expect that more cannabis startup would reach high market valuations in the months to come.
Of most particularly concerning were the double-digit declines of Canada's major cannabis stocks, Canopy Growth Corp., Aurora Cannabis Inc., and Tilray Inc. The decline has been happening since Oct. 17.
Tilray's was down 23.5 percent, Canopy's was trading 10.8 percent lower, And Aurora Cannabis plunged by 28.4 percent.
Canopy Growth and Aurora Cannabis both hit an all-time high on Oct. 16.
The plunge was particularly disappointing for Aurora Cannabis as it is set to begin trading on the New York Stock Exchange on Oct. 23. Its market capitalization had also reached more than 150 percent or $10 billion in August.
In September, Aurora had discussions with Coca-Cola regarding the development of CBD-infused beverages. This happened a month after beverage maker Constellation Brands held similar talks with rival Canopy growth.
Elsewhere, Canadian stocks suffering decline included Ontario-based Aphria Inc., Cronos Group, CanTrust Holdings, and Horizons Marijuana Life Sciences ETF.
The current decline in marijuana stocks is not isolated with Canada-based companies but to the other U.S. and world cannabis stocks as well.
The ETFMG Alternative Harvest ETF, the biggest U.S. pot exchange-traded fund dropped more than 9 percent on Oct. 22.
India Globalization Capital Inc., Medmen Enterprises Inc., Green Organic Dutchman Holdings Ltd., have all plunged Monday.
Nevertheless, investors were said to be optimistic that Canada's legalization would actually open a new playing field and more advantageous environment for investors.
Jon Trauben, a managing partner at the cannabis-focused Altitude Investment Management, told Markets Insider that the legalization in Canada would offer a roadmap for investors to venture in the companies that pioneered and would serve an institution of the legal cannabis industry in the future.
