Short sellers circle cannabis stocks

NEW YORK - Wall Street’s love of cannabis appears to be going up in smoke as vaping-related ailments and missed revenue projections are prompting short sellers to raise their bets against the industry, fund managers and analysts said on Wednesday.

Short interest in cannabis stocks, which reflects bets that prices will fall, has risen 55 per cent for the year to date, handing short-focused investors more than $US2 billion ($F4.4b) in profits over the period, according to data released by research firm S3 Partners on Monday.

More than 800 cases of a vaping-related lung disease and 12 deaths across 10 US states have so far been reported by the US Centers for Disease Control and Prevention, leading states such as Massachusetts to impose temporary bans on all vaping products. Those numbers are expected to climb.

Fund managers say increased short selling is a sign that the industry is transitioning from a can’t-lose proposition to a shakeout that will leave only the highest-quality companies standing.