On a broad scale, the marijuana industry has been mostly unstoppable for years. Canada has become the first industrialized country in the world to legalize recreational cannabis, while 33 U.S. states have given the green light to medical marijuana (11 of which also allow adult-use consumption). These ongoing legalization efforts, and the expectation of organic growth in legalized countries/states, is what's fueled the march higher in marijuana stocks.

But when examined with a fine-tooth comb, the cannabis industry isn't without its hiccups. In June, despite a 2% increase in the Horizons Marijuana Life Sciences ETF, the first tradable cannabis ETF, more than 60% of the 60 pot stocks I regularly track declined. And some of the marijuana stocks that declined are especially popular among the investing community.

The following three popular pot stocks all sank by a double-digit percentage in June.

A cannabis leaf laid within the outline of the Canadian flag's red maple leaf, with rolled joints and a cannabis buds to the left of the flag.

Image source: Getty Images.

HEXO: Down 17%

Among the most-followed marijuana stocks, maybe none proved to be a bigger disappointment in June than HEXO (NYSE:HEXO), which lost about a sixth of its value. The Quebec-based pot grower's woes can be traced to two events last month.

First, Wall Street was not pleased with HEXO's third-quarter operating results, released on June 12. It was no secret prior to this report that supply issues were impacting most of the country, and marijuana stocks that had reported their quarterly operating results before HEXO had shown little, if any, organic growth. Nevertheless, it didn't absolve HEXO from delivering unimpressive sequential quarterly sales results. Even with a nearly 1,200% increase in year-over-year sales, HEXO's net cannabis revenue fell 3% from the sequential second quarter, with both medical and recreational sales declining. Furthermore, even with the benefit of fair-value adjustments on biological assets, HEXO's loss ballooned from the year-ago quarter. 

The other concern is that Health Canada laid out the official timeline as to when derivative products (e.g., edibles, infused beverages, topicals, vapes, and so on) will begin hitting dispensary shelves. Although laws regulating derivatives are expected to take effect on Oct. 17, 2019, the one-year anniversary of adult-use legalization in Canada, these products won't begin to see the light of day in licensed cannabis stores until mid-December, at the earliest. Since HEXO has devoted a significant portion of its infrastructure to extracts, this means another quarter or two without a significant margin and sales boost.

Over the longer run, HEXO does look to have its ducks in a row. But in the interim, the company's operating results could remain decidedly weak.

Two businessmen in suits shaking hands, as if in agreement.

Image source: Getty Images.

Origin House: Down 15%

Another popular pot stock that had a miserable June is cannabis distribution company Origin House (OTC:ORHOF), which is in the process of being acquired by Cresco Labs (OTC:CRLBF). Origin House shed 15% of its value last month and, like HEXO, has two catalysts to blame for its poor performance.

Despite shareholders overwhelmingly voting in favor of the combination, the first problem Origin House and Cresco Labs encountered was the request for additional information from the U.S. Justice Department. Although this merger doesn't offer much in the way of overlapping businesses, an antitrust review from the Justice Department could hinder this combination. I personally don't foresee the Justice Department denying this merger, but it could close later than Wall Street has been expecting. 

The second factor that's dragged down Origin House is weakness in most U.S. dispensary stocks. While most pot stocks fell during the second quarter, few groups were as weak as the vertically integrated U.S. dispensary operators. Since the Cresco Labs buyout is an all-stock deal, this ties Origin House at the hip to Cresco's performance.

But in spite of recent weakness, this merger holds a promising future. Cresco Labs gaining access to more than 500 California dispensaries via Origin House's distribution licenses should make it a force to be reckoned with in the Golden State.

A young man with a beard and sunglasses blowing vape smoke out of his mouth while outside.

Image source: Getty Images.

OrganiGram Holdings: Down 11%

The third brand-name pot stock that had a rough go of things in June was OrganiGram Holdings (NASDAQ:OGI). Shares of the Atlantic-based grower tumbled 11% during the month, although there weren't as many clear catalysts to explain its decline.

The biggest negative for OrganiGram in June was the aforementioned delay in rolling out higher margin derivative products. Even though OrganiGram has been very much reliant on the adult-use market in the early going -- recreational consumers usually buy dried flower -- it's been beefing up its extraction capacity and has signed third-party extraction deals with the expressed intent of diversifying its portfolio and bringing to market a higher margin assortment of cannabis products. Investors will now have to wait at least another quarter before we see a significant boost to the company's margins and bottom line.

Perhaps a more under-the-radar reason OrganiGram tapered off in June is simply because it's been outperforming nearly all of its peers in recent months. In May, when more than half of all pot stocks lost at least 10% of their value, OrganiGram barely ended lower. Therefore, OrganiGram's June swoon might be nothing more than the company falling in sympathy with its peers given persistent supply chain weaknesses throughout Canada.

What investors can't ignore is the fact that OrganiGram's yield per square foot is likely to be at least twice as good as the industry average, and that it's secured deals with all of Canada's provinces. Suffice it to say, any material weakness in OrganiGram looks like a potential buying opportunity.