Cannabis stocks were mostly lower Monday, with market leader Canopy Growth Corp. under pressure from an activist shareholder that said it would vote against a key deal aimed at securing Canopy a foothold in the U.S.

Activist shareholder Marcato Capital Management LP said Monday it plans to vote against Canopy’s

CGC, -0.69%


WEED, -0.52%

 plan to acquire Acreage Holdings Inc.

ACRGF, -4.21%

 for $3.4 billion, as soon as weed has been fully legalized in the U.S. That news was greeted with much ballyhoo when it was announced in April with Canopy buying the rights to acquire the multi-state operator at a future date.

In an open letter to Acreage’s board, Marcato described the deal as “value destructive” and said the price is “substantially lower than the fair value of Acreage based solely on the present value of Acreage’s future cash flows.”

Marcato owns a 2.7% stake in Acreage’s subordinated voting shares.

“We believe Acreage’s strategic value, as one of the few multi-state operators of scale in the U.S., with leading positions in the most valuable markets merits a significant premium to any stand-alone cash-flow derived valuation,” said the letter. “Furthermore, we believe enterprise values of cannabis companies will skyrocket upon the relaxation of current Federal restrictions.

“Accordingly, Marcato believes it is highly imprudent for Acreage to sell itself today at the proposed valuation, with so much unlocked growth and value embedded in the company.”

Canopy shares fell 0.6%, while Acreage was down 2.1%.

Read now: These colleges now offer courses in cannabis

GMP analyst Martin Landry cut his revenue forecasts for Aurora Cannabis Inc.

ACB, -0.45%

ACB, -0.08%

 ahead of that company’s March quarter earnings expected next Tuesday. Landry lowered his fiscal third-quarter revenue forecast to C$74 million ($55 million) from C$91 million, and cut his fiscal fourth-quarter revenue forecast to C$132 million from C$150 million.

See: Why Aurora Cannabis hasn’t signed a deal with a U.S. giant like other pot companies

“This is to reflect the low sales volumes reported by Health Canada in the recreational channel for January and February of 2019,” Landry wrote in a note to clients. “We continue to believe that the main reason for the limited sales growth is the cap that has been placed on the retail network by the provincial regulators, limiting the number of cannabis stores and hindering black market penetration.”

With inventory at online stores improving and licensed producers ramping up production, the supply constraints that motivated the licensing caps are likely waning, he said. Aurora’s capacity rose to 120 tons planted as of February form 100 tons in January, he wrote.

In case you missed it: CEO of pot producer Cronos talks about Altria deal, weed drinks and the rise of CBD

Landry said data tracking dried flower inventory availability for online recreational cannabis stores in Ontario, Quebec and Alberta, or about 73% of the Canadian population, found that Aurora has been best performer with a more than 25% share of in-stock SKUs (shopkeeping units) since the start of the year. That’s an increase from a share of about 18% in the October to December period, he said.

The analyst reiterated his buy rating on the stock and C$15 price target and said he still expects the company to be leader in the industry over the long term. Shares were down 0.1%.

Aleafia Health Inc. shares

ALEF, +11.59%

ALEF, +11.59%

 were up 13%, after the company unveiled a joint venture with German pharma wholesaler Acnos Pharma GmbH. The venture will buy Aleafia branded cannabis oils for distribution to German pharmacies and for clinical trials. Aleafia unit Emblem Cannabis Corp. will own 60% of the venture, with Acnos owning the remaining 40%.

BMO is expecting the German cannabis market to generate revenue of $5 billion by 2025, at far higher margins than are available in Canada, thanks to reimbursement of patient purchasing costs through private and public health insurance, which is not available in North America.

“Germany will not just be the largest medical cannabis market in Europe, it will also become the model example for Europe in regard to regulations and quality standards, which is why Acnos welcomes the partnership with Aleafia Health with great excitement,” said Acnos co-owner Maximilian Claudel.

Curaleaf Holdings Inc. shares

CURLF, +2.70%

 were also bucking the downtrend, adding x$ after the company said it has signed an agreement that gives it the option to acquire Ohio Growth Therapies medical cannabis cultivation and processing licenses and facility in Ohio. The option allows Curaleaf to acquire what will be a 15,000 sq. ft facility for cultivation and 7,500 sq. feet of processing space for $20 million.

In regulatory news, Illinois Gov. J.B. Pritzker said at the weekend that he’s reached an agreement with lawmakers on a plan to legalize cannabis for adult recreational use by next year, according to media reports. The planned legislation would allow adults 21 and older buy cannabis and possess up to about an ounce. There are also plans to expunge past cannabis convictions.

Elsewhere in the sector, Cronos Group Inc. shares

CRON, -3.44%

CRON, -3.73%

 were down 3.5% and Tilray Inc.

TLRY, -1.56%

 was down 1.6%.

Green Organic Dutchman Holdings Ltd.

TGOD, -1.61%

TGOD, -1.61%

 was down 1.8%. GW Pharmaceuticals PLC

GWPH, +1.94%

 was up 1.9%, medical cannabis retailer MedMen Enterprises Inc. shares

MMNFF, -2.18%

 were down 2.4% and Aphria Inc.

APHA, -2.74%

APHA, -2.58%

 was down 2.4%. Valens GroWorks Corp.

VGWCF, -1.00%

 was down 1.7%.

Read also: How living near a marijuana dispensary affects your home’s price

Read: Tilray stock rises after the company shows it can sell recreational pot

The Horizons Marijuana Life Sciences ETF

HMMJ, -0.48%

was down 0.3%, and the ETFMG Alternative Harvest ETF

MJ, -0.35%

was down 0.4%.

Meanwhile, the Dow Jones Industrial Average

DJIA, -0.87%

 was down 0.8%, while the S&P 500 index

SPX, -0.97%

 was down 0.9%.

See also: In California’s Weed Country, wildfires burn both cash and crops

Cannabis Watch: All of MarketWatch’s coverage of cannabis companies

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