Cannabis stocks were mostly lower Thursday, resuming the selloff seen earlier in the week, as investors shrugged off a buy recommendation on market leader Canopy Growth Corp., and news that Delaware is closer to adult-use legalization.

Stifel analyst Andrew Carter initiated coverage of the four big Canadian cannabis companies, rating Canopy CGC, -2.26% , WEED, -2.16% the biggest company by market capitalization thanks to its $4 billion investment from Corona beer distributor Constellation Brands Inc. STZ, -2.51% , as the sole buy in the group.

Cartner assigned hold ratings to shares of Cronos Group Inc. CRON, +1.58% CRON, +1.18% , Tilray Inc. TLRY, +1.06% and Aurora Cannabis Inc. ACB, +0.58% ACB, +0.14% .

Carter is expecting the Canadian adult-use market to reach C$9 billion ($6.7 billion) in value by 2023, while the medical market grows to just over C$700 million. The October release of edibles and derivatives products will give the market a fresh boost and help companies differentiate their profiles, he wrote.

“We believe partnerships are key to these companies developing global supply chains with the sort of efficiency that large consumer packaged goods companies offer,” said the analyst. Canopy and Cronos are best placed given their partnership with Constellation and in Cronos’ case, tobacco giant Altria Group Inc. MO, +1.05% , while Tilray has a number of deals, but none with a company with a vested interest, he wrote. Aurora has hired billionaire activist Nelson Petliz as adviser to help build the company, “necessary in our view to aid in the company’s development,” said Carter.

The real jewel will be the U.S. market once it is fully legalized, as it will account for about half of future global sales, or upward of $100 billion. Canopy has a clear advantage here, thanks to its option to acquire Acreage Holdings Inc., said the analyst.

For now, the sector has remained highly volatile and Aurora could be a takeover target in the event of a pullback, with Canopy and Cronos most likely to strike.

“Cronos has demonstrated a strong track record for value creation particularly through distressed assets,” said Carter.

Canopy shares were down for much of the morning before reversing to trade up 1.6% in afternoon trading, Cronos fell 1.1%%, Tilray edged up 0.5% and Aurora was down 2.3%.

A Delaware House committee approved a bill Wednesday that would legalize cannabis for adult recreational use, advocacy site Marijuana Moment reported. The bill, if approved by the full House, would make it legal for adults of 21 and older to possess, consume and purchase cannabis from an initial outlet of 15 retailers.

“Both the public and elected officials are recognizing that cannabis prohibition is a failed policy and that was reflected in the committee’s approval of HB 110 today,” Olivia Naugle, legislative coordinator with the Marijuana Policy Project told the website. “We hope the full House will now follow the committee’s lead and vote to replace prohibition with sensible regulation.”

From New York, Senator Kirsten Gillibrand, a Democratic presidential candidate, pledged to make a lifting of the federal ban on cannabis a cornerstone of her presidency, if elected. In an essay published in Medium, Gillibrand argued that the current policy is simply a continuation of the institutional racism that has defined the criminal justice system for decades.

“Black Americans are more likely to be arrested for non-violent marijuana offenses than white Americans, even though use rates are roughly the same across races,” she wrote. “And we’re talking about entire lives, families, and communities being derailed: felony convictions make it much harder to get and keep jobs, access financial loans, exercise the right to vote, travel abroad, and receive social and housing benefits.”

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Gillibrand said that if elected, she would immediately deschedule cannabis, which is currently classified in the same category as heroin. She would then “start working to not only heal the damage done by racist drug laws, but tap into the medical and economic opportunity that legal marijuana offers.”

See: This company wants to be the Bacardi of cannabis — and it has plans for an IPO

That opportunity includes expunging non-violent convictions, legalizing medical and recreational use nationwide and allowing access to the banking system.

Read now:Push for legislation allowing banks to serve the cannabis business is gaining momentum

Why the future of Canada's cannabis industry is not smoking products

From Connecticut comes the news that five new conditions have been added to the state’s medical cannabis program, based on the recommendation of a board of doctors, according to Marijuana Business Daily. Patients suffering from the bladder pain disorder interstitial cystitis, intractable neuropathic pain, medial arcuate ligament syndrome, which causes stomach pain, tourette syndrome and vulvodynia and vulvar burning will be eligible for medical cannabis cards if the state Legislature’s Regulations Review Committee accepts the recommendation.

Cannabis Watch:For more of MarketWatch’s coverage of the sector

Tilt Holdings Inc.’s U.S.-listed shares TILT, -2.38% US:SVVTF rose 5.5%, after Chief Executive Mark Scatterday defended the company’s recent financials, which come after the company made headlines in early May when it wrote down $500 million. In a letter responding to investor concerns about $60 million in stock-based compensation that showed up as the company posted a large first-quarter loss, Scatterday said those options were issued six months ago, before he took on the CEO role.

Tilt management and founders remain “strongly” committed to the company, as witnessed by the additional and extended lock-up agreement signed by a number of insiders to not sell shares. The letter comes after the stock closed Wednesday at a record low, after plunging 39% over the past month.

Medicine Man Technologies Inc. shares US:MDCL slid 1.5%, even as the company said it has agreed to sell shares to private-equity firm Dye Capital & Co. for up to $14 million. The Denver, Colorado-based company will use the funds to finance growth and pending acquisitions, that include research and phytopharmaceuticals company Medicine Man Denver, Los Sueños Farms and cannabis products maker Mesa Organics. Two members of Dye Capital’s board, Justin Dye and Leo Rivera, will join the Medicine Man board and Dye, who is managing partner, will become chairman. Dye Capital specializes in investments in the cannabis sector.

For more, see:Tilt CEO responds to investor concerns, as insiders sign additional share lock-up agreements

Elsewhere, Valens GroWorks Corp. US:VGWCF was down 2.5%, Organigram Holdings Inc. OGI, -2.70% was down 0.9% and Aleafia Health Inc. CA:ALEF ALEAF, -3.57% dropped 5.7% after unveiling a convertible bond offering.

Green Growth Brands Inc. GGBXF, -21.81% was down 3.9%. Aphria Inc. APHA, -4.95% APHA, -5.22% gained 1.3% and Green Organic Dutchman Holdings Inc. TGOD, -3.27% TGOD, -3.27% was unchanged%.

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The Horizons Marijuana Life Sciences ETF HMMJ, -1.70% was down 0.9%, and the ETFMG Alternative Harvest ETF MJ, was down 0.2%.