As the euphoria surrounding the first legal sales of recreational cannabis fades, appetites for weed investments have dried up.
In the run up to the legalization of recreational marijuana across Canada on Oct. 17, there was a frenzied rush on pot stocks and much money was made by investors.
But since then shares in some of the biggest cannabis companies, such as Canopy, Aurora and Aphira, are all down more than 20 per cent.
"The cannabis stocks are not for the faint of heart,鈥� Vivien Azer, cannabis analyst with Cowen & Co in New York, told 麻豆影视.
The selling pressure now has some wondering if cannabis stocks are headed towards a dot com era burnout.
鈥淲e鈥檙e cautious overall on the industry because of what we found to be just exuberance in expectations,鈥� Stuart Rolfe, an analyst with Veritas Investment Research in Toronto, said.
That exuberance has pushed up the value of largely unproven businesses into the billions of dollars.
But Azer added: "These companies are actually selling product and generating revenue, which is a far cry from what we had during the tech bubble.鈥�
Predicting which companies will dominate remains hazy.
Research firm GMP found 95 per cent of cannabis customers surveyed on legalization day were unaware of the brands they had just bought, meaning companies trying to cash in will need to ace the retailing side of the business.
David Segal, co-founder of Montreal-based Davids Tea, added: 鈥淧eople know how to buy clothing. You walk into a clothing store and a person walks up to you and says 鈥楬i鈥� and you go 鈥榡ust looking鈥�.
鈥淏ut when you go to buy cannabis a lot of people are new to this. There鈥檚 an education process.鈥�
The real test will come as cannabis companies begin reporting their financial results, the stock market鈥檚 way of grading winners and losers.
---- With files from 麻豆影视鈥� Jon Erlichman
