The stock market has been on a tear since hitting a trough in March 2009, but in recent years it's marijuana stocks that have headed to the front of the class, so to speak. Back in June, we looked at the dozen largest marijuana stocks and found that the average gain (I repeat, average gain) was 332% over the trailing 12-month period.

It's not hard to understand why marijuana stocks have rallied as much as they have, either. According to surveys from both Gallup and CBS News, we've witnessed a dramatic shift in the way the American public views cannabis. Back in the mid-1990s, Gallup's polls showed that just a quarter of the public wanted pot legalized across the country. As of Oct. 2016, 60% of Gallup respondents were now in favor of national legalization. Similarly, 61% of respondents in CBS News' poll in April 2017 favored legalizing the drug. 

A tipped over bottle of cannabis buds lying on a stack of cash.

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Legal sales of marijuana have also been exceptionally strong. Marijuana Business Daily's latest report entitled "Marijuana Business Factbook 2017" estimates that legal U.S. sales could grow 30% in 2016, and an aggregate of 300% between 2016 and 2021 to about $17 billion. If legal sales can keep growing by 25% to 30% annually, there's no reason to believe marijuana stocks won't benefit to some degree.

Marijuana's bad apples

As a result of these catalysts, marijuana stocks are almost up across the board. Almost. Of the 14 largest pot stocks (those with a market cap of at least $200 million), just two haven't participated in the move higher: Insys Therapeutics (NASDAQ:INSY) and Zynerba Pharmaceuticals (NASDAQ:ZYNE).

Why Insys has taken it on the chin

Arguably the most disappointing marijuana stock, shares of Insys Therapeutics have plunged by 38% over the trailing year. Two catalysts can be blamed for its poor performance, albeit one has been a much bigger issue than the other. 

First and foremost, point the finger at allegations and lawsuits surrounding Subsys, a sublingual treatment for breakthrough cancer pain. Allegedly, Insys wasn't marketing Subsys solely at breakthrough cancer patients and was, instead, targeting physicians that prescribe opioid medications. Subsys is, after all, a synthetic opioid. The investigation into wrongdoing, coupled with a watchful eye on Subsys' marketing and use moving forward, has halved sales of the drug and pushed Insys from a company that was generating regular quarterly profits to a company that now loses money each quarter. It's simply unclear when sales of Subsys will stabilize and what, if any, penalties or fines Insys Therapeutics could incur as a result.

An investor grasping his head in frustration while staring at multiple computer screens.

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The second issue was the expected delay in the launch of Syndros, the company's oral dronabinol solution to treat chemotherapy-induced nausea and vomiting (CINV), as well as anorexia associated with AIDS. Because dronabinol is essentially a pharmaceutical version of tetrahydrocannabinol, which you probably know better as THC, it had to go through the scheduling process with the U.S. Drug Enforcement Agency. It took more than a year from the drug's Food and Drug Administration (FDA) approval to get its scheduling and obtain final labeling approval from the FDA to reach its August launch date. That more than one year delay proved costly given Subsys' woes.

If there is a bright spot here, it's that Syndros may have the capacity to completely replace the lost Subsys sales, and then some, in the next couple of years. That would make Insys healthfully profitable again, and would probably make it a bargain at its current level. Then again, the CINV market is very crowded, meaning Insys is going to need to price its product appropriately in order to succeed. While there are no givens here, I'd be cautiously optimistic about Insys moving forward.

Clinical data dooms Zynerba

Whereas Insys' woes mostly relate to a drug that has nothing to do with cannabis or cannabinoids, Zynerba Pharmaceuticals' woes are solely the result of its lead drug ZYN002 failing to live up to the hype in two phase 2 studies. Shares of Zynerba have fallen 39% over the trailing year.

Biotech lab researchers examining a liquid sample in a test tube and making notes.

Image source: Getty Images.

The Star 1 study involving Zynerba's cannabidiol (CBD)-based gel for patients with epilepsy failed to produce a statistically significant reduction in focal seizures in both of its tested doses compared to the placebo. In fact, the lower dose led to a greater focal seizure percentage reduction than the higher dose, which makes any further studies in this indication likely a dead-end. It was also the first true efficacy data investors had received from Zynerba.

However, just one week after releasing data from Star 1, Zynerba would disappoint investors yet again with data from its midstage Stop study in patients with knee pain due to osteoarthritis. The study failed to meet its primary endpoint of a reduction in the weekly mean of the 24-hour average worst pain score at week 12 relative to the baseline. However, the Stop study did meet a handful of secondary endpoints that Zynerba's management team believes warrants continued development of ZYN002.

Both of Zynerba's studies were a wake-up call to investors that while cannabis may be medicine, it and its cannabinoids aren't guaranteed to be a functional cure for all ailments. Zynerba has yet to really demonstrate to investors that it has the tools in its pipeline to deliver game-changing therapies, and until we see that, it'd probably be best for investors to stick to the sidelines.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.