While the market mood has come a long way back from the slump we saw in September, Big Cannabis has yet to rebound with any force, notes Hilary Kramer, in the Trading Desk.

People on Wall Street just aren’t thinking hard about these stocks right now. At this point, the “green wave” has already swept through North America and usage has plateaued.

It’s a high plateau, don’t get me wrong. The last survey I saw suggested that 55 million Americans bought legal cannabis in the past year and 65% of them imbibe at least once a month.

That’s a long way from the number of active tobacco smokers, even though tobacco continues to fade from the generational spotlight year by year.

However, if you’re looking for exponential expansion, you won’t find it here any more. Over the last three years of disruption and dramatic shifts in consumer behavior, cannabis use hasn’t even climbed at an annualized rate of 10% . . . hardly enough to get excited.

And in the absence of massive headline growth, the companies currently in the space need to take market share from each other in order to give shareholders what we want. They need to compete.

Competition costs money. Chasing new supply contracts drives prices down, at least in the short term as aggressive sales practices resort to discounting in order to win business.

Unless you have a real differentiating factor, it’s a zero-sum game: a mutual race to the bottom. Good for consumers, terrible for producers. Until we see those differentiated products emerge, we’ll see the broad cannabis group race to the bottom just like this year. It’s been a terrible year for Big Cannabis, casting a shadow over the entire industry.

My proprietary cannabis indexes down 27% YTD. Not fun at all. And the two stocks that have defied the trend each have something unique in their favor.

Organigram (OGI) excels on quality and is working on cannabis-derived pharmaceutical products. Those products will be patent protected, defying the race to the bottom. And then there’s Tilray (TLRY), now the biggest supplier in many market segments and arguably the highest-quality name among the major cultivators.

They’ve got scale on their side and an inside track on the medicinal market. Clearly it’s won them fans on Wall Street. Until we see real action elsewhere in the group, these are the only two names you really need to look at. Everything else is embroidery around the edges . . . at least for now.

Subscribe to Hilary Kramer's Trading Desk here…