Marijuana legalization was supposed to give Canada's cannabis fanciers access to above board and reliable drug sources while providing tax revenue for the government. But one year in, large numbers of Canadian cannabis users continue to rely on underground dealers. Like with U.S. states that have grudgingly legalized marijuana for recreational use, the black market goes on thriving and generating profits because politicians and regulators have hobbled legal businesses and inconvenienced consumers through high taxes and excessive rules.

As a result, Canada's legal market is largely uncompetitive with the long-established black market there.

HEXO Corp. posted a net loss of $56 million, including a $17 million write-down on cannabis inventory for its fourth fiscal quarter ending July 31, 2019, amid significant turbulence for the Gatineau, Que.-based licensed producer which led it to lay off close to 20 per cent of its workforce last week. 

HEXO attributed its inventory loss to “price compression” and the overall net loss to the scale of its operations and increased research and development expenses. 

The company brought in a net revenue of $15.4 million from the sale of 4,009 kilograms of cannabis for the three months ending July 31, 2019 but its average selling price on the recreational market was just $3.51 per gram. 

The Canadian marijuana stocks on our list could benefit most, at least in the short term, from the legalization of cannabis derivatives in Canada

SmallCapPower | October 28, 2019: On October 17, 2019, Canada legalized cannabis-derivative products, such as edibles, oils for vape pens, and beverages, in what investors have been calling Cannabis 2.0. Cannabis investors and speculators are hoping that Cannabis 2.0 will be the next big catalyst to move the share prices of these stocks higher. Today we have identified five Canadian marijuana stocks that are set to benefit most, at least in the short term, from the legalization of cannabis derivatives in Canada.

*Share prices at October 24, 2019, data obtained from S&P Capital IQ

Given the unpopularity of marijuana stocks these past few months, it's a relief when the rare piece of good news filters down into the industry. This happened last week, with official statistics in Canada -- one of the only countries in the world where recreational marijuana is legal nationwide -- showing substantial growth for the sixth month in a row.

Lawyers representing 11 people who were disqualified from applying to open a cannabis retail store in Ontario are seeking to appeal after a court dismissed their challenge of the rejection last month.

The group has filed a notice that it is seeking leave to appeal the divisional court decision, saying the three-judge panel erred in finding the Alcohol and Gaming Commission of Ontario acted reasonably in interpreting the licensing rules.

It also argues the case raises issues that go beyond the interests of the specific parties, such as what counts as proper notification.

The group has also filed a motion contesting another judge’s decision not to put the cannabis licensing process on hold until the application for leave to appeal is resolved.

Over the next decade, marijuana is projected to be one of the fastest growing industries. Having already more than tripled sales on a worldwide basis between 2014 and 2018 to $10.9 billion, the industry has some Wall Street forecasts calling for $50 billion, $75 billion, or even $200 billion in annual global weed sales by 2030. Figures like these are what make marijuana stocks such an attractive investment opportunity.

At this time one year ago, cannabis stocks were seated high on the mountain top overlooking nearly all other industries and sectors. The marijuana industry simply couldn't be stopped, with Canada becoming the first industrialized country in the world to legalize recreational pot on Oct. 17, 2018.

But my how the tables have turned.

The past few months have undoubtedly not been the kindest to pot stocks. For anyone who religiously watches the market, they know that there is a heightened level of volatility throughout the industry. This is something that is simply characteristic of pot stocks at this point. While there are many reasons for this, the two main ones are speculation and the infancy of the industry overall. Pot stocks are highly subjective to speculation due to the infancy of the market.

In an attempt to deter youth from vaping following growing health concerns, the Ontario government has decided to enforce a ban on the promotion of vapor products in convenience stores and gas stations.

The announcement was made Friday that the ban will officially take effect on January 1, 2020 and that ads for vape products will only be allowed in specialty shops where patrons must be at least 19 to enter.

“Restricting the promotion of vapour products will help prevent youth from being exposed and influenced by promotion in retail settings,” Health Minister Christine Elliott said in a news release.

The announcement comes after multiple consultations following research that states an increasing number of youth are using vape products.