What happened

It's Monday, and marijuana stocks are vaporizing. In 11:30 a.m. EDT trading, Canopy Growth (NASDAQ:CGC) stock is down a depressing 4.4%, and cannabis rivals Aurora Cannabis (NYSE:ACB) and Hexo (NYSE:HEXO) have both tumbled about 8% each.

And if you want to know why, ask Aphria (NASDAQ:APHA).

Smoke filled room in black and white

Image source: Getty Images.

So what

Yes, unfair as it may feel, the stock to blame for Canopy's, Aurora's, and Hexo's declines today is none of the above, but rather their cannabis-growing rival Aphria, which reported its fiscal Q3 2021 earnings results this morning.

Suffice it to say that the news was not good.  

Sales at the Canadian cannabis company grew a respectable 6% to CA$153.6 million in Q3 2021, but that was well below the CA$166.2 million that analysts had predicted. Worse, Aphria reported a CA$1.14-per-share loss for the quarter, versus the tiny profit (calculated according to generally accepted accounting principles or GAAP) reported a year ago. In terms of U.S. dollars, Aphria lost $0.91 per share.

Now what

Aphria blamed "the duration and impact of lockdowns across many of the regions we operate in, particularly in Canada" for its disappointing results, but insisted that it "remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves" and said it is still "excited about the strategic opportunities for incremental growth," particularly in the U.S. market.

Regardless, the fact that Aphria's gross profits on its sales declined by nearly half in the quarter suggests that demand for the product isn't necessarily Aphria's (or Canopy's or Aurora's or Hexo's) biggest problem going forward. Shrinking profit on growing sales speaks to declining pricing power in the industry as oversupply continues to weigh on profitability for medical marijuana and recreational marijuana alike.

That's not good news for Aphria's future. It's not good news for Canopy Growth, Aurora Cannabis, or Hexo, either.

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.