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This April 15, 2017 file photo shows marijuana plants for sale at the ShowGrow dispensary a medical marijuana provider in downtown Los Angeles.

Richard Vogel/AP

Globe editors have posted this research report with permission of Beacon Securities Ltd. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

In our Jan. 8, 2018 report, we cautioned that "given the extraordinary increases in the past few weeks, we see a heightened risk of a healthy pullback." The sector (using the Horizons Marijuana Life Sciences Index ETF as a gauge) peaked the next day. The average North American cannabis stock is down 35 per cent since that date.

While no two corrections are the same, given the limited history of the cannabis sector, in this report, we compare the current experience to the April to June 2017 correction. In particular, we note that last year, the average stock was down 30 per cent during the 57 days between the peak and the sector trough.

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While there are other factors at play (there are more companies and money in the system now, and recreational sales are now only six months away with several supply agreements announced), the fact that the average stock is down 35 per cent in the 49 days since the sector peaked suggests to us that we are likely much closer to the end of this pullback than the beginning. Accordingly, we recommend investors consider becoming more constructive in the sector. In particular, we highlight Village Farms, where we believe a major catalyst (licensing) is imminent.

Read the full report here.

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The federal government now says legal marijuana won’t be available for sale before August. Health Minister Ginette Petitpas Taylor says once the Senate holds a final vote by June 7, provinces will need eight to 12 weeks to prepare. The Canadian Press
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