What happened

Shares of top Canadian marijuana stocks were sinking Monday morning in the wake of a massive overall stock market sell-off fueled by continued coronavirus worries and plunging oil prices. Aurora Cannabis (NYSE:ACB) and Tilray (NASDAQ:TLRY) stocks were hit the hardest, with shares tumbling 7.7% and 8.3%, respectively, as of 10:38 a.m. EDT. Shares of Canopy Growth (NASDAQ:CGC) were falling 6.5% lower. Cronos Group (NASDAQ:CRON) and OrganiGram Holdings (NASDAQ:OGI) stocks were down 4.7% and 3.6%, respectively. 

So what

Do the coronavirus outbreak and lower oil prices really hurt the business prospects for the leading Canadian cannabis producers? Probably not very much. It's possible that some of the companies that buy products such as vape devices that are made in China could be negatively impacted if Chinese manufacturing is disrupted. On the other hand, lower oil prices should also lead to lower shipping costs for cannabis companies.

Cannabis plant in a greenhouse

Image source: Getty Images.

However, fear is in the air with the stock market in general. None of the top Canadian cannabis producers are profitable yet. They're all in an early stage industry that continues to experience some headwinds. It's not surprising that investors are bailing out of marijuana stocks since the cannabis industry itself is more speculative than most other industries.

It's also not surprising that Aurora and Tilray are getting slammed the most. Neither company has a large partner with an equity stake like Canopy and Cronos do. OrganiGram doesn't have a big partner, but it's in a stronger financial position than most of its peers thanks to management's fiscal discipline.

Now what

Perhaps the best thing for long-term investors to do is take a deep breath and sit back. Today's sell-off doesn't change the fundamental growth opportunities for any of the top Canadian cannabis producers.

There are some positive developments for each of these companies. Ontario is issuing new retail cannabis licenses beginning this month, a move that should boost retail sales for all of the leading cannabis producers this year. The Cannabis 2.0 market in Canada is just getting going. Medical cannabis markets in Europe and elsewhere continue to expand.

Of course, there are still challenges -- especially for some of the companies. Aurora, in particular, could have to raise more cash in the not-too-distant future. Not every marijuana stock is a bargain buy even after the recent carnage.

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.