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A marijuana growth facility in Maryland. Photo: Michael Robinson Chavez/The Washington Post/Getty Images

Marijuana stocks have fallen hard in 2019 and short sellers have been increasing their positions, betting the sector is overvalued and primed for further losses. Despite the passage of the SAFE Act through the House last week, Wall Street remains bearish on companies dealing in the drug.

The latest: Bank of America Merrill Lynch analysts Christopher Carey and Lisa Lewandowski downgraded Canada's Canopy Growth, the world's largest marijuana company, to neutral from buy, saying Wall Street expectations are "far too high."

What they're saying: While Carey and Lewandowski said they still see future growth ahead for both the company and the Canadian cannabis market, it's not enough to justify significant further price gains, they wrote in a note to clients.

  • "Canada industry growth is set to pause in the second half, potentially flattening, a trend we think could also be the case with Canopy; and yet the Street is modeling strong double-digit sales growth quarter-on-quarter."
  • They expect the slowdown in near-term industry growth in part because of the negative impact of vaping legislation.

Why it matters to the market: The tide looks to have turned on pot stocks this year, with 2 major ETFs that track the marijuana industry — the Horizons Marijuana Life Sciences ETF and ETFMG Alternative Harvest — losing about half their value since October 2018.

  • Cannabis short sellers, who had gotten smoked betting against the industry in 2018, are seeing their luck change, with the top 20 shorts in the sector up $336 million in the second quarter and $1.76 billion in Q3, data from S3 Partners shows.
  • Since the BAML note was published on Friday, short sellers have seen more than $200 million in mark-to-market profits, according to S3's data.

Go deeper: The future of cannabis is mainstream retail

Go deeper

3 hours ago - Technology

TikTok drives new nostalgia economy

Illustration: Shoshana Gordon/Axios

Older brands, trends and technologies are making a comeback as younger consumers desperately chase slower, less chaotic times.

The big picture: TikTok's algorithm makes it easy for flashback items to resurface and quickly go viral both on its platform and eventually on other social networks.

Updated 6 hours ago - World

Reports: Up to 17 U.S. missionaries kidnapped in Haiti

Haitian soldiers guard the public prosecutor's office in Port-au-Prince earlier this month. Photo: Richard Pierrin/AFP via Getty Images

Children were among up to 17 American Christian missionaries and their relatives kidnapped by a gang in Haiti on Saturday, the New York Times first reported.

Details: The missionaries had just left an orphanage and were traveling by bus to the airport to "drop off some members" and were due to travel to another destination when the gang struck in Port-au-Prince, Haitian security officials said, per the NYT.

8 hours ago - World

Melbourne, "world's most locked-down city," to lift stay-at-home orders

Victorian Premier Daniel Andrews during a news conference in Melbourne, Australia, on Sunday. Photo: Quinn Rooney/Getty Images

Melbourne's stay-at-home orders will end five days earlier than planned, officials in Australia's second-biggest city announced Sunday.

Why it matters: The capital of the state of Victoria has had six lockdowns totaling 262 days since March last year. That means Melbourne spent longer under lockdown than "any other city in the world" during the pandemic, Reuters notes.