5 Of The Worst Marijuana Stocks Of 2016

Marijuana gained some major momentum on Election Day, scoring ballot victories in California, Nevada, Massachusetts, Maine, Florida, North Dakota, Arkansas and Montana.

Unfortunately, a federal ban on marijuana means that investing in marijuana stocks can be risky business.

5 Of The Worst

While most marijuana stocks have been on fire in 2016, some have been disastrous for investors. Here are five stocks in the The Marijuana Index’s comprehensive list of North American marijuana-related stocks that have had a disappointing 2016.

1. GOLDEN LEAF HOLDIN COM NPV GLDFF -11.2 percent

Golden Leaf is an Oregon-based company that grows, processes and distributes medical marijuana.

2. 22nd Century Group Inc XXII -20.7 percent

22nd Century is a biotechnology company that is researching ways to control and modify the amount of cannabinoids in cannabis.

3. MassRoots Inc MSRT -34.5 percent

MassRoots is an online and mobile platform that allows users and businesses to share cannabis-related content.

4. Insys Therapeutics Inc INSY -55.5 percent

Insys is a commercial-stage specialty pharmaceutical company with two FDA-approved cannabis-based drugs.

5. Zoned Properties Inc ZDPY -68.3 percent

Zoned Properties is a real estate company that focuses on acquiring buildings, land and greenhouses used for marijuana cultivation.

Reasons For The Underperformance

Alan Brochstein, founding partner at New Cannabis Ventures and founder at 420 Investor, tells Benzinga that there are identifiable reasons why several of these stocks have struggled this year.

"Golden Leaf has been undercapitalized, and their convertible debt issuance has pressured the stock over the past few months," Brochstein explains.

"MassRoots endured a perfect storm of sorts. Their 420 event in April was a flop, business fundamentals haven't lived up to the expectations, a convertible note added a bunch of shares to the float and the company sold 10mm shares at $0.50. The company has streamlined its operations now and has started to offer more services to advertisers."

Finally, Brochstein says Zoned Properties' valuation simply lost touch with reality.

"A company like this, which owns real estate, should trade closer to its net asset value, which would suggest a price below $0.35 per share, especially as long as it is not generating positive operating cash flow," he concluded.

Overall this year, the North American Marijuana Index is up more than 238 percent.