Wall Street dealt with continued volatility on Monday, with the Dow Jones Industrial Average working its way lower even as other parts of the market saw gains. With earnings season hitting a crescendo this week, investors are looking closely at the specific prospects for certain corners of the market, and that's contributing to disparities among the various major benchmarks followed most often by investors. Amid the crosscurrents, marijuana stocks took particularly hard hits, and New Age Beverages (NASDAQ:NBEV), Tilray (NASDAQ:TLRY), and Canopy Growth (NASDAQ:CGC) were among the worst performers on the day. Here's why they did so poorly. Taking a pause All three of these stocks have given back some of their gains following the long-awaited legalization of recreational cannabis in the Canadian market last week. In the month leading up to the Oct. 17 start date for legal cannabis sales, New Age Beverages tripled in value, while Tilray had more than doubled since the end of August, and Canopy Growth had seen more modest gains of between 10% and 20%. But since then, the reality of the Canadian cannabis market appears to have put pressure on the stocks. Supply constraints have highlighted the need for further development of production facilities and retail infrastructure before consumers will be able to get all the marijuana products they want, but capacity expansion also raises fears of price declines in the long run. Threading that needle could prove problematic for the industry in general, and that explains the downbeat mood over the past few days. Some company-specific issues In addition to overall industry trends having turned negative in the short run, there are also some problems that are specific to these individual companies: New Age Beverages has seen its conference presentation of its cannabidiol-infused beverages come and go, but it's now clear to investors that the process for actually making those products available to consumers could take considerably longer. At a key moment for cannabis companies, the delay is a threat to developing a first-mover competitive advantage, especially as higher-profile beverage companies look more closely at the cannabis market. That explains much of its 16% drop today. Tilray fell nearly 16% as investors continue to weigh the pros and cons of the marijuana producer's limited share float. Tilray has more than 76 million outstanding shares, but only about 10 million of those shares trade, according to Yahoo! Finance. That has set up an environment that encourages short squeezes, but when demand for shares dries up, it can also cause volatile downward moves as well. Canopy Growth lost 11%. Many see Canopy as the giant of the industry, especially given its key partnership with beer and spirits giant Constellation Brands. Yet for investors, the fact that Constellation has the right to take a controlling interest in Canopy with warrants that it can exercise at 50.40 Canadian dollars per share -- roughly $38.50 in U.S. dollars at current exchange rates -- arguably puts a ceiling on how far the stock could climb. Investors should expect marijuana stocks to remain volatile, with moves in both directions likely. Despite the potential of cannabis to become a much larger consumer market than it has been in the past, that's no guarantee that those who invest in the space right now will eventually enjoy big gains from these three top marijuana stocks.<doc-sep>Marijuana stocks suffered broad and sharp losses Monday, and were headed for their worst five-session skid in over eight months as full-legalization in Canada appears to have taken the shine off the sector despite early indications of strong demand. Canada-traded Horizons Marijuana Life Sciences Index exchange-traded fund HMMJ, +4.11% plummeted 11.6%, the largest drop since the fund started trading in April 2017. The ETFMG Alternative Harvest exchange-traded fund MJ, +2.68% tumbled 9.4%. The ETF has lost 20% amid a five-session losing streak, the worst five-day performance since the ETF’s inception on Dec. 3, 2015. The sector continues to lose ground since adult recreational marijuana use became fully legal in Canada on Oct. 17. In the two months leading up to full-legalization, the cannabis ETF had soared 46%. Don’t miss: Cannabis is now legal in Canada, but pot companies expect a rocky start. Among the more-active weed stocks Monday, Aurora Cannabis Inc. US:ACBFF ACB, +6.08% shed 12.8%, a day before the Vancouver-based medical cannabis company’s stock was slated to begin trading on the New York Stock Exchange, under the ticker symbol “ACB.” Shares of Canopy Growth Corp. CGC, +0.79% WEED, +1.17% slumped 11%, Cronos Group Inc. CRON, +4.02% dropped 12%, New Age Beverages Corp. NBEV, +6.31% plunged 16% and Tilray Inc. TLRY, +7.83% lost 16%. Corona beer maker Constellation Brands Inc. STZ, -0.32% , which made a splash when it boosted its stake in Canopy Growth by $4 billion in August, saw its shares lose 1.7%. India Globalization Capital Inc.’s stock IGC, +2.26% plummeted 16%. It has lost roughly half its value in the past five days, and has shed 80% since closing at an eight-year high of $13 on Oct. 2. Also read: All the potential red flags for investors in IGC, the pot stock that jumped 1,000% in three months. Shares of Net Element Inc. NETE, +4.36% were a rare highlight for bulls, as they shot up 53% on heavy volume after the Florida-based financial technology company said its Unified Payments subsidiary launched a “secure and compliant” payment processing offering for the legal cannabis industry. Trading volume spiked to 9.8 million shares, compared with the full-day average of about 81,000 shares. The broad sector selloff comes despite early indications of strong demand since full-legalization. “While it was difficult for provinces and experts to predict just what the demand for cannabis would be once legalized, the actual demand far exceeds any reasonable expectations,” said Quebec-based Hexo Corp. in a statement. The company added that it has delivered on all orders since full legalization and has also replenished its stock, but the shares HEXO, +3.34% US:HYYDF slid 13% on Monday. Elsewhere, MedMen Enterprises Inc. shares MMNFF, +0.75% lost 12% after the full-service cannabis company said it acquired a dispensary in San Jose, Calif., for an undisclosed sum. The news follows the company’s announcement earlier this month of a $682 million buyout of PharmCann, to mark the biggest-ever deal for a U.S.-based marijuana company. “MedMen continues to expand its market share in California, the largest and most advanced cannabis market in the world,” said Chief Executive Adam Bierman. “Our next phase of growth will be focused on going deeper in the markets where we already have a presence and brand equity.” Shares of Green Organic Dutchman Holdings Ltd. TGODF, +7.57% declined 16%, Aleafia Health Inc. ALEAF, +1.51% gave up 19% and Aphria Inc. US:APHQF fell 14%. Meanwhile, the Horizons marijuana ETF was still up 21% over the past three months and the ETFMG ETF was up 23%, while the S&P 500 index SPX, +0.19% has slipped 1.8%. Check out: MarketWatch’s comprehensive coverage of the cannabis sector, including profiles of a number of key players<doc-sep>NEW A vastly improved search engine helps you find the latest on companies, business leaders, and news more easily.<doc-sep>Finished buds sit in a tray at the CannTrust Holdings Inc. cannabis production facility in Fenwick, Ontario, Canada, on Monday, Oct. 15, 2018. Canada, which has allowed medical marijuana for almost two decades, legalizes the drug for recreational use on Oct. 17, joining Uruguay as one of two countries without restrictions on pot and putting the country at the forefront of what could be a $150 billion-plus global market when others follow. An exchange-traded fund that tracks popular pot stocks fell sharply on Monday, led by shares of Canadian marijuana company Tilray. Traders pointed to profit taking following the legalization of recreational pot in Canada and the end of big conferences earlier in the month. The ETFMG Alternative Harvest ETF (MJ) dropped more than 9.2 percent, it's second-worst day ever. Tilray led the sharp decline in pot stocks, falling more than 15.5 percent. Tilray posted its worst day since Oct. 2, when it dropped 16.25 percent. After the bell the company said it issued $25 million in convertible notes in addition to the $450 million in notes tender earlier in the year. Toronto-listed Aurora Cannabis and Canopy Growth also contributed to the decline, sliding 12.2 percent and 11.2 percent, respectively.<doc-sep>
Employee Martin Henderson walks past several plants of cannabis at Up's cannabis factory in Lincoln, Ontario, on October 12, 2018. Tilray fell more than 15.5 percent in the prior session, posting its worst day since Oct. 2, when it dropped 16.25 percent. After the bell the company said it issued $25 million in convertible notes in addition to the $450 million in notes tendered earlier in the year. Tilray fell 1.4 percent in U.S. trading, while Canopy Growth also slipped 1.4 percent in Canada. An exchange-traded fund that tracks popular pot stocks fell 2.8 percent. Known as the ETFMG Alternative Harvest ETF ( MJ ), the fund dropped more than 9.2 percent on Monday, its second-worst day ever. The MJ ETF is down 14 percent this month. Canadian marijuana stocks Tilray and Canopy Growth pared deep losses Tuesday as U.S. markets continued their downward slump in October. Aurora Cannabis pared losses after falling sharply following its New York Stock Exchange debut. Toronto-listed Aurora Cannabis and Canopy Growth also contributed to Monday's decline, sliding 12.2 percent and 11.2 percent, respectively. Aurora also started trading in the U.S. on Tuesday, dropping 14 percent in its NYSE debut. Traders blamed several reasons for the sell-off in the big cannabis names. Several large conferences in the past few weeks, as well as legalization in Canada on Oct. 17, generated excitement in the space and bid up prices, one Canopy Growth shareholder told CNBC. Monday's move may reflect a degree of profit-taking, investors said. Bennett Gross, president and manager at Los Angeles-based L&S Advisors, said he's not focused on intraday action and remains excited to be a part of an industry he expects to flourish over the next several years. "It's about owning a piece of an industry that'll be much bigger in five to 10 years. ... We really like the financial strength of Canopy in terms of having a large war chest," Gross said, noting the cannabis producer's relationship with Constellation Brands. "Prohibition ends only once, and this industry could be worth tens of billions of dollars," he added. "I think picking who the winners will be is virtually impossible. We're happy owning a more established company." Investors could also be raising cash before the launch of three big U.S.-based cannabis companies on Canadian stock exchanges within the next month, the trader said. Acreage Holdings, one of the U.S.' largest vertically integrated multistate cannabis operators, announced earlier this year that it had closed a Series E funding round, securing $119 million of capital. The company is expected to launch on the Canadian Stock Exchange in early November. WATCH: The cannabis sativa plant isn't just for smoking. You can build your home with hemp