What happened

Marijuana stocks are in retreat yet again today. Specifically, shares of Aurora Cannabis (ACB -3.93%) and Canopy Growth (CGC -6.92%) were both down by approximately 6.8%, while Sundial Growers (SNDL -0.85%) stock had fallen 5.5% as of 10:36 a.m. ET Monday morning. 

Cannabis equities have been steadily moving lower in 2022. The industry has struggled in the face of supply gluts, shifting consumer trends, a fragmented legal landscape in key geographies like the U.S., banking limitations, and margin erosion stemming from legal and illegal competition, among many other headwinds.  

A cannabis plant against a dark background.

Image Source: Getty Images.

So what

Shares of Aurora Cannabis, Canopy Growth, and Sundial growers are likely dipping again today due to concerns about this week's spate of upcoming corporate earnings. Investors appear to be worried that inflation may have cut into corporate profits over the prior three-month period. Underscoring this point, every major U.S. stock index is down by almost 1% at the time of this writing.

Why are these top marijuana stocks getting punished over investors' concerns about corporate profits? The fact of the matter is that Aurora, Canopy, and Sundial have all been struggling to achieve profitability since their inception.

Speaking to this point, the high-value U.S. cannabis market is still largely off-limits for these Canada-based companies, and their domestic market is simply too small to support multiple billion-dollar enterprises.

As a result, this unfavorable situation in the budding cannabis space has become an increasingly hard sell to investors. As such, it's not altogether surprising to see these top cannabis stocks come under pressure as investors steadily lose their appetite for risk. 

Now what

Are any of these beaten-down cannabis stocks a buy right now? At first glance, shares of Aurora and Canopy might be tempting at these bargain-basement levels. After all, both of these companies could grow into titans of the massive global cannabis market in the years to come.

Unfortunately, these two early pioneers of the legal marijuana game are both staring down some serious financial headwinds at the moment. So until their top and bottom lines stabilize, investors are probably best served by staying on the sidelines.

As far as Sundial Growers is concerned, the company is in the process of dealing with its share price not being in compliance with the Nasdaq's $1 bid requirement. Now, the company may come out in a far stronger position once this key overhang with its stock has finally been addressed. But its shares don't exactly come across as a screaming buy ahead of this material event.