The 3 Reasons Why Cannabis Stocks Are Dropping This Month

Let's face it: It's been a rough summer for cannabis stocks.

Since June, the popular marijuana ETF EFTMG Alternative Harvest (NYSEARCA: MJ) has dropped 20%.

Meanwhile, cannabis industry leaders like Canopy Growth Corp Inc. (NYSE: CGC) and Tilray Inc. (NASDAQ: TLRY) have fallen more than 35% over the same period.

After the stellar returns from the first half of the year, investors are asking why cannabis stocks are dropping.

Especially with the cannabis industry's hot first half of 2019, in which Alternative Harvest peaked at $39.25 per share

You see, there are three reasons why cannabis stocks have hit the brakes on big returns. Today, we're going to give you a breakdown of these reasons.

Plus, we'll show you how you could still generate the kind of returns from the marijuana industry you're used to, no matter which way the cannabis market heads next...

High Profile Scandals Are Pushing Cannabis Stocks Lower

Despite a hot start to 2019, a series of scandals shook investor confidence in cannabis.

In July, Canopy Growth Corp. let go of its co-chief executive, Bruce Linton, and one of the firm's principal board members.

Linton was widely considered one of the cannabis industry's most innovative executives. He was the firm's primary founder, and he fostered much of Canopy's growth over the last five years.

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According to reports, beer distributor Constellation Brands Inc. (NYSE: STZ) was a significant driver of Linton's departure. And Constellation invested $4 billion into Canopy last year.

Reports say mounting loss under Linton's guidance made Constellation incredibly unhappy.

As Canopy's biggest investor, Constellation ousted Linton. And this is likely the first stage of a dramatic restructuring of the one of the biggest cannabis firms.

For many investors, this goes against the hands-off approach that made cannabis stocks successful.

Meanwhile, Canadian medical cannabis company CannTrust Holdings Inc. (NYSE: CTST) is battling unlicensed cannabis cultivation accusations.

Plus, the Canadian government seized more than five metric tons of cannabis grown by the firm.

Reports say executives were completely aware of the illegal activities.

Since then, this cannabis stock has tumbled more than 75%. And it'll likely stay at the bottom of the barrel for the foreseeable future.

But these aren't the only things pushing marijuana stocks down. In fact, there may be a bigger storm on the horizon...

Regulatory Woes Are Driving Cannabis Stocks Down

On top of controversy and scandals, cannabis stocks are under attack by the FDA.

In July, the FDA called out U.S. medical cannabis firm Curaleaf Holdings Inc. (OTCMKTS: CURLF) over false health claims.

The FDA said the firm couldn't say CBD could treat Alzheimer's and opioid withdrawal.

The FDA's attack on CBD promotion is the latest in a string of increasing efforts to limit the distribution of CBD.

You see, CBD wasn't included in the 2018 Farm Bill that legalized hemp. So, under current federal legislation, CBD is still classified as a drug.

And until the FDA regulates CBD, American firms cannot include CBD in food or beverages.

With the FDA cracking down on CBD, near-term profits for cannabis stocks are on the rocks.

But the FDA isn't the only interference coming from Washington...

Cannabis Companies Are in Financial Purgatory

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Over the summer, financial regulations ground the cannabis industry to a halt.

In July, the Senate Committee on Banking, Housing, and Urban Affairs hosted a hearing.

In D.C., lawmakers, industry experts, and advocates talked about updating the regulations currently hurting industry growth.

One piece of legislation under review was the Secure and Fair Enforcement Banking Act. It would let banks work directly with the cannabis industry.

Right now, banks can't work with cannabis firms. If they were to try, they'd face punishments over money laundering and racketing.

Despite the proposal, the hearing did not bode well for the cannabis industry. The Senate ended up tabling the discussion entirely.

Even with progressive talks on the campaign trail, it's unlikely that D.C. will revamp federal CBD regulations before 2020.

So, marijuana industry growth is likely to remain capped while the biggest investment firms are forced on the sidelines.

But it's not all bad news.

If anything, the recent pullback in cannabis stock prices has put the entire market sector "on sale" for smart investors. In fact, investing in cannabis stocks now could mint you a profit down the line.

And it can be incredibly easy - if you know where to look...

Now Could Be the Perfect Time to Invest in Cannabis Stocks

Have you been waiting for the perfect time to get into the cannabis sector? Well, now could be the time to go "all in." America's "green gold rush" has been growing like a weed... and it's just getting started. Click here to find out how to stake your claim...

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