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Staff work in a marijuana grow room at Canopy Growth's Tweed facility in Smiths Falls, Ont. on Aug. 23, 2018.

Sean Kilpatrick/The Canadian Press

Investing in cannabis companies in the first two years after Canadian legalization has been a horror show, with many of the stocks down by two-thirds to 90 per cent.

Many pot stocks peaked just two days before marijuana legalization on Oct. 17, 2018. As Canada slowly, and many say clumsily, rolled out its domestic market, most stocks fell, and fell, never to recover.

To once again survey the damage, we looked at 100 pot companies whose stocks were, in 2019, part of the indexes created by Germany’s Solactive to track the emerging North American market. Many of the companies are now gone, either acquired or bankrupt.

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Of the 64 that have stuck around from legalization to today, just five have generated a positive return over the past two years. There are 21, by contrast, that are down 90 per cent or more in that period, according to an analysis performed using the S&P Global Market Intelligence database.

Since legalization, “there’s been a bit of an awakening," says Charles Taerk, chief executive officer of Faircourt Asset Management, which manages the cannabis-oriented Ninepoint Alternative Health Fund.

Initially, he says, “there was a sense of exuberance. … People just every week thought, let’s get into this one. Let’s get into that one." Now, he says, "What we’ve done in the two or three years is we’ve gone through an early entrepreneurial phase, and now into what I look at as a operational execution phase.”

Pot stocks, two years in

Company TickerMkt. Cap. ($ Mil.) 10/15/2018Mkt. Cap. ($ Mil.)2Y Price Chg. 10/15/2018 to 10/14/2020
The Scotts Miracle-Gro Co.SMG-N5,22812,191146.2
Canopy Growth Corp.WEED-T16,9708,945-67.3
Green Thumb Industries Inc. GTII-CSE3,6944,374-16.9
GW Pharmaceuticals PLCGWPH-Q5,6543,951-32.6
Innovative Industrial PropertiesIIPR-N5453,746228.8
Trulieve Cannabis Corp.TRUL-CSE2,0613,66553.2
Cronos Group Inc. CRON-T2,7182,586-51.4
Aphria Inc. APHA-T4,9702,222-61.3
TerrAscend Corp.TER-CSE1,2091,150-39.6
Tilray Inc. TLRY-Q20,004999-96.4
Planet 13 Holdings Inc. PLTH-CSE30581283.8
Aurora Cannabis Inc. ACB-T14,482724-96.7
Charlotte's Web Holdings Inc.CWEB-T290561-75.7
Hexo Corp. HEXO-T1,753483-88.8
Village Farms Int'l Inc. VFF-T357444-10.1
Neptune Wellness Solutions Inc. (TSX:NEPT)NEPT-T470319-51.4
OrganiGram Holdings Inc. OGI-T1,041302-81.1
Valens Company Inc. VLNS-T181221-13.1
Rubicon Organics Inc.ROMJ-T10718926.5
Canopy Rivers Inc. RIV-T1,007177-84.7

The top performer, with a return of 228 per cent, is New York Stock Exchange-traded Innovative Industrial Properties Inc. It’s a real estate company that caters to cannabis retailers and producers, so it has the upside of the industry, but it also has tangible assets to fall back on if things go poof.

The runner-up is a company that many cannabis investors don’t even consider a pot stock: Scotts Miracle-Gro Co., an old-line U.S. fertilizer company that has gained 146 per cent over the past two years.

The three remaining winners are: Planet 13 Holdings Inc. and Trulieve Cannabis Corp. from the Canadian Securities Exchange and Rubicon Organics Inc. from the TSX Venture exchange.

The biggest Canadian names that dominated the early headlines are more likely to be found among the biggest losers. Aphria Inc. and Canopy Growth Corp. are down between 60 per cent and 70 per cent. Tilray Inc. and Aurora Cannabis Inc. are both down more than 96 per cent.

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That also means an extraordinary amount of market value has been vaporized in the industry. Tilray, which trades in the United States, had a market capitalization of roughly $20-billion at the time of legalization in 2018; it’s now worth about $1-billion. Aurora has gone to about $700-million from more than $14-billion.

The share price changes don’t always tell the story, because many companies have issued plenty of extra shares and can actually be more valuable, in sum, than they were before. For example, Green Thumb Industries Inc.’s market value has gone up to nearly $4.4-billion today from $3.7-billion in October, 2018, even as the stock price fell 16.9 per cent.

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