What happened 

Shares of Canopy Growth Corporation (NYSE:CGC) fell 10.1% in July, according to data provided by S&P Global Market Intelligence, after the company got a little more competition in the pot industry. 

So what 

Canopy Growth stock sold off ahead of the IPO of Tilray, Inc. (NASDAQ:TLRY) another Canadian cannabis supplier with growth aspirations. Tilray being public doesn't necessarily change Canopy Growth's earnings prospects, but it adds to the places investors can put their cannabis investment dollars. 

Interior of a cannabis growing facility.

Image source: Getty Images.

I don't think it's a coincidence that the low point of the month for Canopy Growth was the day after Tilray's IPO. There was a rotation of investors out of Canopy Growth and into Tilray, which had the short-term impact of pushing shares lower. 

Now what 

Sometimes the mechanics of the stock market are more important to a stock's short-term performance than a company's actual earnings results. That's what I think we're seeing here in the dynamic between Tilray and Canopy Growth. There wasn't a fundamental change in Canopy Growth's business in July, but the stock's move is a reminder that the cannabis industry is small and volatile and something little -- like a competitor's IPO -- can affect the company's stock price.

Travis Hoium 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.