What happened

Marijuana stocks as a class rallied strongly last week as investors found good news in the earnings reports of Canopy Growth (CGC 3.69%) and Aurora Cannabis (ACB 2.54%) -- and perhaps a bit of hope for federal marijuana reform after Democrats' stronger-than-expected showing in the midterm elections.

This week, however, investor enthusiasm for the cannabis sector seems to have gone wobbly. While they initially rose strongly -- by as much as 5% in early trading Monday -- marijuana stocks have given back most of those gains. For example, as of 10:15 a.m. ET, Canopy was still up 0.7%, but Aurora was trading down 0.7%. Elsewhere in the sector, Tilray Brands' (TLRY 1.43%) strong early gains were pared to just 1.6%.

Only OTC-listed cannabis stock Curaleaf Holdings (CURLF 2.17%) continued to power higher -- up 3.3%.

So what

Not coincidentally, Curaleaf is also the only big-name marijuana stock that had actual news to report Monday morning. The Massachusetts-based company announced that it is expanding its operations into California, launching the sale of pre-rolled "Grassroots" branded marijuana joints boosted with "diamonds" of tetrahydrocannabinolic acid (THCA, a precursor to the high-inducing chemical THC ).    

Curaleaf management further noted that it is rebranding Grassroots in both California and Maryland, and plans to expand that rebranding to all seven of its markets "in the coming months." Investors seem to be betting that the changes Curaleaf is making will help to differentiate its product from other marijuana brands, helping the company to grow sales (which were up 7% in its most recently reported quarter).

Now what

Of course, while that would be good news for Curaleaf, if it gains market share at the expense of its competitors, it could be bad news for Aurora, Canopy Growth, and/or Tilray. That might explain why those three stocks are underperforming Curaleaf Monday morning.

It's worth remembering, however, that even the news that helped boost the prices of marijuana stocks last week was hardly great. Aurora Cannabis, for example, reported an 18% decline in sales for its most recent quarter, and Canopy Growth's sales slid 10%. (Tilray reported more than a month ago -- a 9% decline in sales). And none of these four companies are earning profits.

Now that investors have had the weekend to digest those latest reports, they may have concluded that declining sales and continuing losses might not really justify bidding up Aurora stock by 17%, Canopy by 28%, or Tilray by 10% -- and that this might be a fine time to take some profits.

If that's the conclusion investors have come to, I'm inclined to agree with them.