The month of October has not been kind to public cannabis companies. The entire sector has now taken a wrong turn, falling more than 20% over the course of the past seven trading days. Top cannabis companies such as the popular company Tilray (NASDAQ: TLRY), which has fell by 6%, and Canopy Growth Corporation (TSX: WEED), which has fell 3.45%, are losing investors’ confidence rapidly.
The current stake of cannabis public stocks is curious to say the least. On October 17, 2018 Canada legalized recreational cannabis throughout the country. Most in the financial communities figured this move in legislation would have an opposite, positive, reaction on stocks involved in this sector of the market.
Others believe the decline in these companies share price can be attributed to a sell off point and profit gain for investors due to the excited surrounding recreational cannabis in a G7 country. Very plainly put investors may have seen legalization in Canada as a high point for stocks involved in the sector, which then lead them to then sell their positions.
Over the past few years financial analysts have given the opinion to investors to be optimistically cautious when investing in marijuana stocks due to their volatile nature, even though these stocks usually rally towards the end of the year due to new legislation passing when the clock strikes January 1. Over the next few months, investors hope to see an increase in profits moving towards 2019.