Why is the marijuana sector trading down more than 3% today?

Cannabis stocks fell Wednesday, led by Cronos Group Inc., after Canaccord downgraded the stock to sell from hold following its weaker-than-expected earnings.

Cronos stock CRON, -9.94%  fell 8%, after Cannacord analysts Matt Bottomley and Bobby Burleson said the company’s valuation was looking stretched after the stock’s strong gains since the December announcement of a C$2.4 billion ($1.8 billion) investment from tobacco giant Altria Inc. MO, -0.93% The stock has gained about 82% since the start of the year.

The analysts were also disappointed by…

the company’s latest quarterly earnings released Tuesday, with revenue of C$5.6 million coming in below expectations of C$10.4 million after a first full quarter of recreational sales in Canada, which fully legalized cannabis in October.

“We note that CRON’s first full quarter of recreational sales fell well behind its large-cap peer group, which reported net revenues that ranged from C$21M to C$83M for the same period,” the analysts wrote in a note to clients.

Still, they took a positive view of some of Cronos’ recent strategic initiatives, which they said could unlock value over the longer term. They cited as examples the company’s partnership with Ginkgo Bioworks, which aims to produce targeted cultured cannabinoids, its international ventures, a supply agreement with Cura Cannabis and a joint venture with MedMen that will seek retail opportunities in Canada.

GMP Securities analyst Martin Landry also said the Cronos results were disappointing and dropped his target price to…

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