Canada Is Set to Legalize Recreational Weed Today. Here’s Why Marijuana Stock Investors Aren’t Cheering

The emotions of weed smokers might be hitting new highs, with Canada expected to legalize recreational cannabis Thursday. But shares of marijuana companies that have much to gain from the change aren’t as peppy.

Though the Canadian senate is likely to vote in favor of legalizing recreational weed in the country Thursday, major marijuana companies are under pressure on the stock market.

Shares of the five biggest pure-play medical marijuana firms in the space have shed a grand total of $ 1.1 billion in market valuation over the past 20 or so hours. On the Toronto Stock Exchange, medical marijuana firm Canopy Growth shed 4%; Aurora Cannabis fell 3.4%; MedReleaf lost 3%, while Aphria shed 6%. Meanwhile, GW Pharmaceuticals dropped 3% on the Nasdaq.

It’s possible that investors are starting to believe that they are getting ahead of themselves and beginning to think that the positive news has already been priced into weed stocks. Canada has long been expected to legalize recreational marijuana — an expectation that’s boosted an index tracking weed-related companies, the North American Marijuana Index, up 150% over the past year. The wider U.S. stock market, as measured by the S&P 500, has risen a less impressive 14% in comparison.

Moreover, there is still much uncertainty at play in the process of legalization. While Canadians have long heard that recreational weed would be up for sale starting July 1, Canada Day, officials have said more recently that they expect delays.

Notably, provincial governments, which are expected to implement the federal level roll-back on weed sales restrictions, have said more time is needed to prepare for the shift.

“As a practical matter — they told us they need 8 to 12 weeks following royal assent for preparatory activities to occur, such as lawful movement of product from license producers to distribution and retail outlets,” Canadian Health Minister Ginette Petitpas Taylor said in February.

And, those delays — which may not be resolved until September by Jacob Capital Management Partner Khurram Malik’s reckoning — could drag on.

“You can’t be sure that [the rollouts] will actually be flawlessly executed,” Malik said.