Why Canopy Growth, Hexo, and Tilray Stocks All Tumbled Today

What happened

Cannabis stocks got a boost on Wednesday when investment bank Jefferies released a report predicting that weed will become legal for adult use all across the land … in 2026.

That sounds like good news for marijuana investors (aside from, you know, the date). And yet despite that, shares of several of the biggest names in marijuana were tumbling. As of 12:15 p.m. EDT:

Image source: Getty Images.

So what

Why is that? Well, the most obvious conclusion is that investors who have been betting on marijuana getting legalized at the federal level as soon as this year weren’t pleased to hear a Wall Street analyst say they might have to wait five years for that happy event.

But for long-term investors, Jefferies’ note holds good news, too. According to the analyst, even before national legalization, marijuana sales in the U.S. jumped 40% in 2020, and could be headed to $36 billion (another doubling) by 2025 — en route to topping $64 billion by 2026, the first year of anticipated federal legalization. And this, says Jefferies, makes investing in cannabis stocks today a “generational wealth opportunity” for investors.

“Exceptional” growth is on the horizon, argues the analyst, asserting that marijuana stocks as a group could potentially double in value this year.

Now what

But here’s the thing: Those gains may not be shared equally, and on Jefferies’ list of the marijuana stocks it likes most, it’s mostly lesser-known names such as Cresco, Curaleaf, and Green Thumb that predominate.

Conversely, reports TheFly.com, the analyst was almost entirely silent on the attractiveness of investing in better-known names such as Canopy Growth, Hexo, and Tilray. It is this conspicuous silence from an avowed fan of cannabis stocks in general, that I suspect is weighing on their share prices Wednesday.