Stock market bandwagon rides, no matter how good usually come to an end. 
Hopefully, investors get where they thought they were going rather than crashing with all aboard.  I often tell clients that I am a professional pessimist and it appears that the irrational exuberance for publicly-traded cannabis stocks is coming to an end.  Exemplify by the reasons discussed in the below article, MedMen Enterprises and PharmaCann terminating the proposed acquisition that was trumpeted as the largest US cannabis company once valued at $682 million.  Harborside Inc., has also backed off on California acquisitions of cultivators, Airfield Supply and Agris Farms.  Attention to business fundamentals is tamping down valuations.

Investing fads in emerging industries often follow a typical path and cannabis stock has done so at a rapid pace.  As soon as legalization became real in a few states, penny stock shells, companies that failed as a mining company that then became a failed software company suddenly became cannabis companies.  The feeding frenzy quickly moved from the OTC Pink Marketplace and FINRA bulletin board to Canadian stock markets.  A welcome step up in issuer disclosures and market integrity but throughout 2018, valuations for all stock deals just kept climbing passed on incredibly optimistic projections and assuming universal legality within a few years.

After the Agricultural Improvement Act of 2018 definitively removed hemp from under a cloud of illegality under the Controlled Substance Act, the major US markets, NASDAQ and the NYSE have become receptive to the economic potential.  Unleashed by an army of MBA’s, core business competence and bottom-line details are beginning to be reflected in valuations as Wall Street is no longer willing to assume profitability and wants to quantify how profits will be realized.

Stock markets are increasingly skittish over volatility and overdue recession fears in general and legal cannabis companies are challenged by looming supply and demand imbalance.
Recreational marijuana and CBD wellness have measurably limited demand and many of the other uses of hemp (paper, plastic and building materials etc) have substantial infrastructure obstacles.  In comparison, the supply side has relatively low barriers to entry and agricultural is desperate for new cash crops.  As Bob Hoban has stated before, commodity pricing is coming and the costs of high tech cultivation are a tough sell to investors.

Investors have a practically limitless number of cannabis investment opportunities to consider and now that the reality of business fundamentals has reared its ugly head, the party is coming to an end and its time to get down to business.  Bandwagons can be an expensive joy ride.  Don’t get on unless you know where it’s headed and how it’s going to get safely get there.