Cannabis stocks have been terrible investments in recent years, and that's putting it mildly. Canadian pot stocks were hot leading up to Canada's legalization in 2018. But since then, by and large, this has been a horrible industry to invest in. The odds are if you've been holding on to pot stocks for several years, you're staring at some pretty big losses.

Three particularly awful stocks highlight just how bad the industry has performed over the past five years.

Cronos Group: 74% decline

Cannabis producer Cronos Group (CRON -1.66%)was and still remains a pot stock that trades at an inflated valuation. At more than 7 times revenue, investors are paying a steep multiple for the company when you consider it isn't hard to find marijuana stocks trading at just 1 times revenue, or even lower.

Cronos expanded into the U.S. through the launch of hemp-based cannabidiol (the non-psychoactive substance in cannabis) products. In 2021, it even announced that its CBD products would be available in more than 550 Ulta Beauty locations.

But the reality is that CBD just isn't a big business. And Cronos' revenue growth has been virtually non-existent; for the period ended March 31, revenue of $20.1 million was 20% less than the $25 million a year ago. And its revenue from the U.S. was less than $650,000.

The only surprising thing about Cronos is that the stock isn't down more than 74% given its still-inflated valuation.

Tilray Brands: 94% decline

An even bigger loss comes from Tilray Brands (TLRY 0.58%), which is down a whopping 94% in five years. That kind of loss would shrink a $10,000 investment into just $600. At 2.4 times trailing revenue, it isn't trading at the premium Cronos is, but it too has fallen short of expectations in a big way.

Chief Executive Officer Irwin Simon previously forecaste that the company would generate $4 billion in revenue come 2024. That pie-in-the-sky prediction isn't happening and it hinged on a lot of things, namely legalization in Europe and the U.S., and it was an overly rosy forecast that simply wasn't warranted to begin with.

Investors have punished the stock for its lackluster results. It has generated around $600 million in sales over the trailing 12 months, and it will be fortunate if it can stay above that threshold in the next 12 months.

Canopy Growth: 97% decline

One of the most colossal declines of the past five years comes from industry giant Canopy Growth (CGC 1.28%) If not for the backing of alcohol beverage maker Constellation Brands and the billions the company has piled into the cannabis producer, it may not have been as aggressive over the years in seeking out investments in the U.S. in the absence of legalization.

In 2019, Canopy Growth ramped up the hype when then-CEO Bruce Linton talked up a deal with Acreage Holdings that would supposedly pave the way for significant growth in a U.S. market, where marijuana remains illegal with no prospect of national legalization in sight. "By combining Acreage's management team, licenses and assets with Canopy Growth's intellectual property and brands, there will be tremendous value creation for both companies' shareholders," he said. Tremendous is the right word indeed, but you just need to substitute "destruction" for "creation."

Even new CEO David Klein has been overly bullish in his expectations. At the start of 2021, he said he was "confident" his company would be operating in the U.S. pot market within a year. Here we are in 2023, and that projection doesn't even look probable any time in the next 12 months.

Stuck in an oversaturated Canadian pot market, Canopy Growth's sales have been declining, but the one constant is that losses and write downs are still a staple of the business. Over the nine-month period ended Dec. 31, Canopy Growth reported asset impairment and restructuring charges totaling $CA1.8 billion ($1.33 billion).

Its continued abysmal performance has made Canopy Growth's decline over the past five years symbolic of the industry's struggles as a whole, putting the exclamation mark on why there needs to be a sweeping overhaul in the Canadian pot market (from a legal standpoint) before it is worth investing in. High taxes, small product sizes, and heavy restrictions on advertising and packaging are just some of the ways legislation is throttling the industry today.

In the U.S. market, there's at least the potential for faster revenue growth as more states legalize marijuana. But if and when the country legalizes marijuana, depending on the legislation, it may not lead to great returns for investors, either. Overall, this is an industry that's not suitable for short-term investors, or those who are risk-averse.