What a difference a few months can make.

During the first quarter, marijuana stocks were the hottest investment on Wall Street, and it wasn't even close. The Horizons Marijuana Life Sciences ETF, the first cannabis-focused exchange-traded fund, gained around 50%, with over a dozen popular pot stocks rising by a minimum of 70%. It looked as if it would be another unstoppable year for the green rush.

Since April, however, pot stocks have been a disaster. Most have lost at least half of their value as supply issues wreak havoc in Canada, high tax rates impact the industry in select U.S. states, and black-market producers thrive throughout North America.

Flowering cannabis plants in a large commercial indoor cultivation farm.

Image source: Getty Images.

CannTrust has been among the worst of the worst in 2019

If there's one cannabis stock that's been hit the hardest of all, it would have to be Ontario-based CannTrust Holdings (OTC:CNTTQ). Since mid-March, CannTrust's share price has declined by more than 90% -- although the company's swan dive isn't entirely due to supply problems in Canada.

CannTrust has, unfortunately, become the poster child of the need for tight cannabis regulations. That's because it was found to have illegally grown marijuana in five unlicensed rooms at its flagship Niagara facility for a period of six months (October 2018 to March 2019). When this information came to light in July, it would prove to be just one of many dominoes that would fall.

Just weeks later, now-former CEO Peter Aceto was fired from his post after emails surfaced suggesting he knew of the illicit grow operations and did nothing to stop them. In fact, it would appear that certain folks at CannTrust were purposefully attempting to deceive regulatory agency Health Canada by putting up fake walls in front of the grow rooms so as to hide any propagating plants.

During the more-than-two-month investigation into CannTrust's illicit weed growing, Health Canada temporarily suspended the company from selling any marijuana. By September, the regulatory agency made its punishment official by suspending CannTrust's cultivation and sales licenses. Though the company will be allowed to harvest and process already propagating plants, no new plants may be grown until such time as its cultivation license is reinstated.

To add insult to injury, CannTrust is burning through cash as it attempts to regain compliance on its cultivation and sales licenses, and both its low share price and inability to file its financial statements on time make it a likely candidate for delisting from the New York Stock Exchange (NYSE) during the first quarter of 2020. If this happens, CannTrust would become the first pot stock to get the boot from a major U.S. exchange.

An investor writing and circling the word buy underneath a dip in a stock chart.

Image source: Getty Images.

Crazy idea: CannTrust is actually a bad-news buy in 2020

To be crystal clear, things aren't going well for CannTrust. But as crazy as this might sound, they're not expected to get much worse, which might actually make it an intriguing all-or-nothing buy in 2020.

The last remaining event that's liable to weigh on its shares is delisting, which I believe to be an inevitability at this point. Being sent back to the over-the-counter exchange will not be viewed as a positive by Wall Street (and it's not), and it's likely going to push shares even lower than they already are. But here are a number of counterarguments to consider about this company.

First, despite having its cultivation and sales licenses suspended, the door remains wide open for CannTrust to regain compliance. Although there's no guarantee it does so, it says something that Health Canada chose to suspend rather than completely revoke the company's cultivation and sales licenses. CannTrust has already made the decision to destroy $58 million worth of cannabis from its illicit grow operation at Niagara, and expects to have met Health Canada's laundry list of requests necessary to satisfy compliance by the end of the first quarter.

Next, don't forget that CannTrust is one of only four Canadian growers to have earned wholesale supply deals with every Canadian province. Even though its licenses are suspended for the moment, CannTrust would quickly regain the ability to sell product in all provinces if its licenses are reinstated. These agreements, therefore, provide some semblance of predictability in a very unpredictable industry.

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

Image source: Getty Images.

Another reason to consider CannTrust a bad-news buy is because it's not exactly losing a lot of ground to its peers. If there were no supply issues in Canada, then CannTrust's ability to grab early stage market share would likely have been irreparably compromised. But because Ontario has so few open dispensaries -- and Health Canada has been slow to approve cultivation, processing, and sales licenses -- the vast majority of marijuana sales in Canada continue to be in the black market. As the legal-channel supply outlook improves, pot stocks will have a better chance to scoop up market share. But until that happens, CannTrust being stuck on the sideline isn't costing the company as much as you'd think.

Also, despite losing money, CannTrust is going to benefit in the interim from having temporarily reduced its workforce, and from having so few crops to cater to and process. Therefore, even with ongoing losses (which is the norm for the entire Canadian pot industry), CannTrust isn't burning through its cash on hand as quickly as some might suspect.

Last, but not least, CannTrust still has the tools to be a top five grower by peak output. Don't forget that, before its legal troubles, the company was on track to produce around 100,000 kilos at its peak from low-cost hydroponic operations at Niagara and Vaughan, and was expected to generate 100,000 kilos to 200,000 kilos from outdoor grow sites, much of which would likely have been processed for higher-margin derivatives. There's value to be had in such robust output potential, assuming CannTrust can regain its licenses.

I'm not saying the road back won't be bumpy, or that the stock can't fall further -- I fully expect it to fall more, once it's delisted from the NYSE -- but a valid case can be made that CannTrust's value proposition could become intriguing in 2020.

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.