So much for the argument that if marijuana is legalized everybody will be smoking dope, sitting on their sofas and playing video games. Far from it. Demand for cannabis has been underwhelming and investors are starting to figure out they’ve been on a bad high.

The legalization of recreational and medical use of cannabis in Canada and several U.S. states has not created the expected demand, and oversupply of the crop has put pressure on prices and the companies aiming to profit from the new industry.

Mark Zekulin, CEO of Canopy Growth, recently told The Wall Street Journal, “It’s been a challenging couple quarters in the cannabis sector.”

Yes, it has been. Marijuana stocks have been tumbling at several companies, Canopy Growth, Tilray and Cronos Group among them, where shares were down year-to-date through Jan. 23 by 44 percent, 71 percent and 47 percent, respectively.

Not surprising when one considers the cannabis business has not shown much propensity for profit growth, and cannabis producers have a high burn rate, as they have been shelling out a lot of capital to expand and achieve scale.

Despite the shocks hitting cannabis companies, Zekulin of Canopy Growth told The Journal, “There is still an emerging global cannabis opportunity with hundreds of billions of dollars across medical, pharmaceutical, CBD and recreational cannabis.”

Some analysts, meanwhile, have deemed the recent plunge in pot stocks to be a buying opportunity for investors.

Future prospects for cannabis companies hinge, in part, on the creation of new revenue streams via more deals with beverage and tobacco companies, and the continuing trend of countries legalizing marijuana for medical and recreational uses. Growers are also pinning some hopes on getting involved in the cultivation of hemp, the non-psychoactive fiber of the cannabis plant, extracted from the stem and used to make rope, building material, clothing, paper and other products. The growing and cultivation of hemp was recently legalized in the United States at the end of 2018.

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.