What happened

Cronos Group (NASDAQ:CRON) stock jumped 12.6% in September, according to data from S&P Global Market Intelligence.

This gain, however, has been erased in the past week, as shares of the Canadian marijuana grower lost 12.1% in the first week of October. This isn't surprising, as marijuana stocks are extremely volatile.

Cronos stock is up 26.4% in 2018 through Oct. 5, versus the S&P 500's 9.5% return. Over the past year, the stock is up a whopping 307%, versus the broader market's 15.3% return.

Close-up of a marijuana leaf with water drops on it.

Image source: Getty Images.

So what

We can largely attribute Cronos stock's robust September performance to investor excitement about the cannabis space in general. This enthusiasm was stoked in August, when news came out that recreational marijuana would become legal for adults in Canada on Oct. 17. 

On Sept. 18, Cronos stock leaped 13.6%, likely driven by positive news from fellow Canadian marijuana grower Tilray, whose stock soared 120% in September. Tilray received approval from the U.S. government to provide a cannabinoid drug to the University of California San Diego Center for Medicinal Cannabis Research to use in a clinical trial for Essential Tremor. This news suggests that marijuana could find more uses in treating medical conditions, which is why it lifted marijuana stocks other than just Tilray. 

Then on Sept. 19, Cronos stock rose 9.8%, which my Fool colleague Keith Speights opined was likely primarily driven by Tilray CEO Brendan Kennedy's interview on CNBC. Kennedy was very bullish on not only his company's prospects, but also on the industry's as a whole. I agree with Keith's take that this interview was probably a bigger catalyst for the stock's move than Cronos' announcement that it inked "a partnership with Aleafia Health to conduct a study evaluating the use of medical cannabis in treating insomnia and daytime sleepiness."

Cronos stock immediately gave back some of the above-noted gains, which is why it was up "only" 12.6% last month. 

Now what

Investors should keep their eyes on the Canadian recreational marijuana market launch, as a stronger-than-expected launch could continue to boost Cronos stock. Same goes for the announcement of any partnerships with big companies.

Like all the pure-play marijuana stocks, Cronos is currently a stock best suited for short-term traders comfortable with a high level of risk, rather than for long-term investors. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.