Marijuana stocks could face steep declines, according to analysts at the Canadian Imperial Bank of Commerce

CIBC analyst John Zamparo believes sales projections for the cannabis industry are "incredibly aggressive." Zamparo predicts that cannabis producer sales will grow to $2.2 billion in 2020 and $3.3 billion in 2021. The average analyst estimate is for $6.5 billion and $7.5 billion, respectively, according to BNN Bloomberg.

Zamparo also thinks that consensus earnings estimates for marijuana accompanies are too high. He forecasts cannabis producers will generate $550 million in earnings before interest, tax, depreciation, and amortization (EBITDA) in 2020 and $975 million in 2021. Analysts on average expect these companies to produce EBITDA of $900 million and $1.6 billion, respectively.

A downward-sloping chart.

Marijuana stocks fell sharply after CIBC analyst John Zamparo issued a sobering outlook for the industry. Image source: Getty Images.

It should be noted that Zamparo's estimates do not include international revenues, a relatively small but fast-growing portion of many cannabis companies' businesses. "It's a fair observation that consensus estimates include international revenues, whereas our estimates do not," Zamparo said. "But the point remains that for many stocks -- mostly outside our coverage universe -- expectations are incredibly aggressive."

Zamparo went on to warn that the struggles of smaller cannabis producers could negatively impact the industry's leaders, should these weaker businesses fail and be forced to liquidate their marijuana assets at a sizable discount. That could dent the profits of even the strongest cannabis companies, Zamparo said.

Cannabis stocks Canopy Growth (NYSE:CGC), Aurora Cannabis (NYSE:ACB), and Cronos Group (NASDAQ:CRON) fell 6.2%, 6.3%, and 8.6%, respectively, following Zamparo's warning. Tuesday's losses furthered a brutal sell-off in these cannabis leaders' shares, which have now fallen 51%, 48%, and 25%, respectively, over the past year.