The big day is nearly here. In just one week's time, marijuana will officially be legal for purchase by adults in our neighbor to the north, ending roughly nine decades of prohibition on recreational cannabis. When legal, and the Canadian industry is fully up to speed, Wall Street will be looking for approximately $5 billion in added annual revenue, much of which will likely be generated via exports to foreign countries where medical weed is approved for use.

The optimism surrounding this expected surge in sales and profits is very much reflected in the price of marijuana stocks. Having screened for 30 of the most popular marijuana stocks that had a market cap in excess of $200 million, 28 of them moved higher in September, including three that more than doubled, and 18 in total that rose by a double-digit percentage. Investors could practically have thrown a dart at the industry and walked away a winner.

However, there were two outliers in an otherwise strong month that was loaded with partnership rumors and lofty sales projections. Let's take a closer look at the only two marijuana stocks to decline in September.

A frustrated stock investor grasping his head while looking at losses on his computer monitor.

Image source: Getty Images.

VIVO Cannabis

Of the two pot stocks to have dropped last month, the 9.1% decline in VIVO Cannabis (OTC:VVCIF), which was formerly known as ABCann Global, may be a bit of a head-scratcher. That's because it reported what would generally be construed by the market as good news in September.

For instance, the Ontario-based grower announced the completion of the first of four seasonal "airhouses" on the company's 65-acre property in Napanee, ON. Once the final touches are complete on this first airhouse, it'll open 68,000 square feet of growing space and yield an estimated 4,000 kilograms annually of dried flower. The expectation from VIVO is that these airhouses will be significantly more cost-effective than traditional glass greenhouses, when all is said and done.  

In early September, VIVO also completed its 133 million Canadian dollar ($102.6 million) acquisition of Canna Farms, the first licensed producer in British Columbia. The acquisition of Canna Farms boosts VIVO Cannabis' production capacity, as well as gives it international leverage that it'll need as it looks to expand its reach. 

So, why the down month? Part of the answer may have to do with the purchase of Canna Farms, which wasn't cheap at CA$133 million. Even more so, it involved just a CA$22.5 million cash component, with 92.5 million shares of VIVO stock being issued for the remainder of Canna Farms' outstanding stock at the time. Share-based dilution has grown to be quite the nuisance for marijuana stock investors, and a ballooning outstanding share count makes it that much more difficult for VIVO to turn a meaningful per-share profit.

A person holding cannabis leaves in their cupped hands.

Image source: Getty Images.

There's also the concern that VIVO, even with unique brands, could be falling too far behind the bigger players in the field. By the end of this year, the combined growing capacity between British Columbia and Ontario is only expected to be a little more than 12,000 kilograms. Meanwhile, companies like Aurora Cannabis are targeting a run rate of 100,000 kilograms of production by the end of 2018. Though there could be advantages to remaining small and focusing on cost, it's possible investors are worried that VIVO Cannabis could simply get lost in the shuffle.

It's certainly a pot grower worth keeping an eye on at this point, but it also has a lot to prove.

Medical Marijuana, Inc.

The only other marijuana stock to take a dive in September was small-cap Medical Marijuana, Inc. (OTC:MJNA), which shed around 10% of its value.

Like VIVO Cannabis, there were positive events that could just as easily have pushed this medical marijuana and hemp-oil producer higher. For example, Medical Marijuana, Inc.'s subsidiary Kannaway reported its largest-ever unaudited sales month in August, which has been a pretty steady trend throughout 2018. A combination of more U.S. states legalizing, along with Medical Marijuana, Inc. and its subsidiaries pushing into foreign markets, has allowed the company to produce sequentially higher sales. 

However, Medical Marijuana, Inc. also has two pretty big issues that have been continuing to weigh on its share price.

A $100 bill on fire atop a stove burner.

Image source: Getty Images.

First, like most marijuana stocks, it's been losing money for a long time. Excluding the slew of one-time benefits and charges a company like Medical Marijuana, Inc. is accustomed to, the company's operating losses have grown in each of the three past years from $1.73 million in 2014 to $5.02 million in 2017. Despite higher sales, the company is having to spend aggressively to move into new markets, which is ensuring it continues to lose money.

The other problem is that the company's ownership stake in AXIM Biotechnologies, which exploded higher in late 2016, has taken a massive hit. Having taken a greater than 40% ownership stake in AXIM, and with AXIM rallying to north of $20 per share at one point following an investment stake at well below $1 per share, AXIM now finds itself at a 52-week low of $1.70 a share. The initial success of this investment had been a major driver of Medical Marijuana's stock two years ago, but the weakness in AXIM's stock has now turned into a notable drag.

Long story short, with little in the way of redeeming fundamental qualities, I'd suggest keeping your distance from Medical Marijuana, Inc.

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.