What happened

Shares of Cronos Group Inc. (CRON 4.74%) were 8.7% lower as of 3:10 p.m. EDT on Friday after falling nearly 11% earlier in the day. Cronos didn't report any new developments that would cause the pullback, but its stock appeared to be weighed down by a sell-off in another Canadian marijuana stock, Tilray. Shares of Tilray were down as much as 31% during earlier trading on Friday in what appears to be the aftermath of a short squeeze.

So what

It's possible that Cronos could also have experienced a short squeeze of sorts, although its shares sold short as a percentage of float are well below the levels for Tilray. Despite today's decline, Cronos Group stock is still up more than 70% in the last month. 

Marijuana leaves in front of globe with North America positioned under the leaves

Image source: Getty Images.

Marijuana stocks, in general, appear to be attracting more traders hoping to make quick profits than investors looking at the long-term potential for the underlying businesses. That potential looks pretty good, especially with Canada opening its legal recreational marijuana market less than one month from now.

Cronos Group, like most of its peers, is rapidly expanding production capacity in anticipation of tremendous demand for recreational marijuana. The company recently signed a deal with Cura Cannabis Solutions by which Cura will buy at least 20,000 kilograms annually over the next five years. Cronos is also partnering with U.S.-based MedMen to launch retail cannabis stores in Canada.

There's an even larger opportunity for Cronos in international medical marijuana markets. The biggest of these is in Germany, where the company has an exclusive supply deal with large German pharmaceutical distributor Pohl-Boskamp.

Now what

Investors will want to closely monitor how the opening of the Canadian recreational market goes next month. Another key thing to watch for with Cronos is potential partnerships with major companies outside of the cannabis industry. Big alcoholic beverage companies, tobacco companies, and pharmaceutical companies are all prospects for lining up deals with major Canadian marijuana growers. 

However, big swings both up and down will probably be the norm for Cronos Group and other marijuana stocks with sky-high valuations. Today's pullback isn't likely to be the last for Cronos over the next few months.