The marijuana industry has had a truly unforgettable year. In October, Canada lifted nine decades of recreational marijuana prohibition and opened its doors to an industry that, when fully up to speed by sometime near the beginning of next decade, should have the potential to generate $5 billion in added annual sales. Mind you, this is an industry that was already thriving via domestic medical weed sales and exports to medically legal markets.

The United States had itself a banner year, too. Residents in two more states (Utah and Missouri) voted to legalize medical cannabis, with both Vermont and Michigan giving the OK to adult-use pot. However, Vermont will be the only state of the 10 recreational weed states that won't allow the drug to be sold in dispensaries.

A frustrated investor grasping the top of his head while looking at losses on his computer screen.

Image source: Getty Images.

Many pot stocks took a beating in November

Despite this incredible year and multiple legalizations taking place over the past two months, marijuana stocks had yet another month to forget in November. Of the 40 largest and most-followed pot stocks, just 14 finished the month higher, many of which were by a low- to mid-single-digit percentage. Meanwhile, 17 of the 26 declining marijuana stocks were throttled and fell by a double-digit percentage. Here they are in descending order, rounded to the nearest whole number.

  • MedMen Enterprises (OTC:MMNFF): down 34%
  • Aphria: down 34%
  • Insys Therapeutics (NASDAQ:INSY): down 30%
  • Curaleaf Holdings: down 27%
  • TerrAscend: down 25%
  • Namaste Technologies: down 24%
  • Emerald Health Therapeutics: down 23%
  • Aleafia Health: down 21%
  • FSD Pharma: down 19%
  • Maricann Group: down 19%
  • Aurora Cannabis (NASDAQ:ACB): down 16%
  • Medical Marijuana: down 14%
  • CannTrust Holdings: down 12%
  • VIVO Cannabis: down 12%
  • Green Thumb Industries: down 12%
  • GW Pharmaceuticals (NASDAQ:GWPH): down 11%
  • Canopy Rivers: down 10%
Potted cannabis plants under special lighting in an indoor grow facility.

Image source: Getty Images.

Still no love for growers

One of the big themes for November is that cannabis growers aren't getting any love from Wall Street or investors. For the better part of the year, we've been hearing about peak production potential and the opportunity to form partnerships, enter new markets, and develop alternative cannabis products. However, with recreational weed now legal in our neighbor to the north, the time has come for those promises to turn into tangible results. Thus far, following the latest round of quarterly reports -- which, mind you, included only a negligible amount of stockpiling prior to the Oct. 17 legalization -- pot stocks have disappointed investors.

For example, the projected top producer when up to full capacity, Aurora Cannabis, shed 16% in November, much of which came off after the company reported its first-quarter operating results. Though it "dazzled" with a profit of 105.5 million Canadian dollars, this was entirely the result of a one-time gain from the disposition of an asset and a gain on derivatives. On an operating basis, Aurora Cannabis lost nearly CA$112 million while spending aggressively to build up its capacity expansion, enter new markets, and make acquisitions.

Not to mention, companies like Aurora Cannabis have been diluting investors to smithereens via bought-deal offerings and share-based acquisitions. Even if Aurora were to turn a genuine operating profit, there's no guarantee it would be meaningful on a per-share basis, with the company now having nearly 1 billion shares outstanding following its ICC Labs acquisition. 

A GW Pharma lab technician in a white coat placing a vial of cannabinoid-rich liquid into a centrifuge.

Image source: GW Pharmaceuticals.

Cannabinoid-based drugmakers had a bad month

Another group that did quite poorly was cannabinoid-based drug stocks like GW Pharmaceuticals and Insys Pharmaceuticals.

GW Pharmaceuticals brought its lead drug Epidiolex -- an oral cannabidiol solution designed to treat two rare forms of childhood-onset epilepsy -- to market about a month ago. However, it carries with it a $32,500 annual price tag that could scare insurers, physicians, and patients away, even though this annual list price is in line with that of other epilepsy treatments. GW Pharmaceuticals may also face competition from Zogenix in Dravet syndrome very soon, which would end its exclusivity as being the only Food and Drug Administration-approved treatment for the ailment.

Meanwhile, Insys Therapeutics is just a mess. No better way to put it than that. The company is considering the sale of its opioid-based line of medicines, which would include fentanyl-based medicine Subsys, the therapy that's currently the source of its legal troubles. Aside from the fact that Insys went from being regularly profitable to losing a lot of money in just the span of three years, its oral dronabinol solution known as Syndros has tallied just $2.6 million in sales all year. By all accounts, Insys' lead drug has been a bust, and the stock is very much worth avoiding at this point.

Two businessmen shaking hands, as if in agreement.

Image source: Getty Images.

Acquirers were punished

A final trend from November was the punishment dished out to acquiring companies. While Wall Street and investors are probably well aware of the need to expand capacity and open as many new sales channels as possible, the fact that these acquisitions are being funded by common stock probably isn't sitting well.

For instance, MedMen Enterprises announced in October that it was going to purchase PharmaCann for $682 million. It was the largest marijuana deal announced for a U.S.-based company. Though the company received a big pop following the news of its acquisition, which'll likely take many quarters to close, investors are probably having second thoughts about MedMen going out and spending as much as it did on PharmaCann to gain 18 additional store licenses, eight new production facilities, and access to six more U.S. states. The high costs associated with this deal, as well as with building out its network of retail locations, probably mean MedMen won't be profitable for years to come

It bears repeating what we are continually reminded of each month with marijuana stocks: They can go down just as easily (and quickly) as they can go up.

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.