Tilray, Aurora, Canopy Growth, and MedMen all fell as recreational use became legal in Canada
The start of recreational marijuana sales in Canada had a surprising effect on pot stocks. Though the market hit twice its daily average of trading volume on October 17, several leading cannabis stocks fell including Canopy Growth, Tilray, and Aurora Cannabis.
The same investors who pushed marijuana stocks to unexpected heights over the past year were the ones waiting to sell in anticipation of legalization on Wednesday. Canopy Growth dropped 4 percent, closing at $50.69. Tilray fell 6 percent to $148.25. Aurora Cannabis ended the day at CAD$13.57 after falling three percent.
On the day hailed by The Globe and Main as the “Green Dawn” over 100 customers were lined up outside the grand opening of Canopy’s Tweed retail store. Company co-chief executive Bruce Linton was there himself to serve Newfoundland’s first recreational marijuana customers.
According to Benchmark analyst Mike Hickey, Canada could surpass CAD$4 billion in marijuana sales next year, and double that amount by 2023. For Hickey to be right, recreational sales have to surpass medical marijuana sales nearly ten-fold.
Stocks began to fall the day before legalization on Tuesday. Dozens of Canadian producers both large and small were affected by a selloff. Cronos Group, which is listed on the Nasdaq, dropped by eight percent to $10.65 per share. U.S. retailer MedMen, which sells its stock in Canada, was up and down all day before closing down 0.5 percent at CAD$8.89 per share.
The pot bubble did not break but is slightly smaller. Now leading cannabis stocks must prove their value with real action.