It's finally happened. After more than three years of the marijuana industry delivering green for their shareholders, the cannabis stock bubble has burst.

While there's no official or concrete definition that describes when the party has ended for a hot industry, I'd call the nearly 50% decline in the Horizons Marijuana Life Sciences ETF -- the first exchange-traded fund focused on cannabis -- over the past six months pretty compelling evidence that something is amiss. The Horizons Marijuana Life Sciences ETF holds more than five dozen pot stocks of various weightings, so it's a pretty good indicator of industry sentiment and performance.

Were that not evidence enough, the month of September generated only six cannabis stocks that rose in value out of the 59 Yours Truly tracks. What's more, just three pot stocks are higher over the trailing 12 months.

There's little denying that the marijuana bubble has burst. But it's important that you understand some of the nuances surrounding this precipitous decline. Here are three things you need to know.

1. This was expected

First of all, investors should understand that the bursting of the cannabis bubble was expected. Over the past quarter of a century, we've witnessed a number of next-big-thing investments come to the forefront, such as the internet, genome decoding, business-to-business commerce, blockchain, and 3D printing. In each and every instance, hyperbolic moves in the companies underlying these trends failed, eventually paving the way for a precipitous decline.

The thing to realize about nascent industries is that they all need time to mature. And yes, even an industry that's existed for decades in the black market needs time to mature. Prior to Canada, no industrialized country in the world had given the green light to recreational marijuana, meaning Canada's federal government and investors are sort of learning as they go. Suffice it to say, there are going to be hiccups along the way.

To our north, Canada has been contending with cannabis supply issues since day one of adult-use legalization on Oct. 17, 2018. These shortages have been complemented by Health Canada being bogged down by a mountain of cultivation and sales license applications.

Meanwhile, in the U.S., high tax rates in select states (ahem, California) have stymied the legal industry and sent consumers back to the black market. It's pretty evident that the marijuana industry needs some time to mature.

2. The long-term growth trajectory for marijuana remains in place

However, the second thing you should understand is that pie-in-the-sky growth estimates for the pot industry over the long run are still very much in play. Canada's supply problems and licensing backlogs are all solvable problems. Likewise, it wouldn't be surprising to see select U.S. states tinker with their marijuana tax rates to entice consumers into legal channels. Nothing about these early stage problems represents a long-term concern for the marijuana industry.

And make no mistake about it, some of Wall Street's growth projections for the legal pot industry are enormous. The low-end of the spectrum suggests that worldwide weed sales will hit $50 billion by the end of the next decade. That compares to investment firm Stifel, which has forecast $200 billion in global cannabis spending in a decade. For context, global sales were a mere $10.9 billion in 2018, suggesting that the compound annual growth rate for legal weed would be as high as 27% per year if Stifel's estimate proves accurate.

Also bear in mind that the U.S. will be responsible for a significant chunk of these sales. Estimates suggest that the U.S. will comprise between a third and half of worldwide weed sales by 2030.

3. It's unclear what companies will ultimately be leaders

Lastly, while this is probably an unpopular opinion, investors should realize that it's far too early to know which pot stocks are going to be the long-term winners and/or leaders in the industry. History tells us that some of the biggest long-term gainers in next-big-thing industries are small-cap stocks today. That means the Canopy Growth's of the weed industry may not make for the best investments.

So, what should you focus on as a cannabis stock investor? While there's clearly a lot still to be sorted out as the marijuana industry matures, focusing on small-cap pot stocks with apparent competitive advantages is a smart way to set yourself up for future gains.

Take Flowr (OTC:FLWPF) for instance. Flowr is a company that's been beaten down in recent months by a common stock offering, as well as its decision not to uplist to the Nasdaq, despite being approved to do so. However, Flowr's Kelowna campus in British Columbia is set to produce at least 50,000 kilos of premium and ultra-premium quality weed when at full operating capacity. Competition among premium and ultra-premium growers is minimal, which should allow for strong pricing power and juicy margins.

Furthermore, Flowr recently completed the acquisition of Holigen and its Aljustrel outdoor grow farm in Portugal. While having an outdoor grow farm isn't unique, the Aljustrel grow farm is capable of 500,000 kilos a year of peak output, which is an incredible amount of output from one facility for such a small company, in terms of market cap.

Planet 13 Holdings (OTC:PLNHF) is another example of a company with comparative differences. Planet 13's SuperStore in Las Vegas is the largest marijuana dispensary in the world. When complete, it'll house a coffee shop, pizzeria, events stage, and consumer-facing processing center, and span a total of 112,000 square feet. That's bigger than the average Walmart, for context.

And it's not just the size of the SuperStore that makes it a go-to for cannabis enthusiasts. Planet 13 has self-pay kiosks in its store to speed along the buying experience for return customers, and has a sizable immersion station for users to acquaint themselves with the product. There's simply nothing like what Planet 13 is doing, which gives it an intriguing advantage moving forward.

If investors think long term, then the bursting of the cannabis bubble now won't be a big deal.

 While many people are anxiously awaiting the start of Michigan's recreational market, a group of farmers and processors working with a different strain of the cannabis plant are celebrating their first harvest.

"We see an opportunity to truly scale the plant to produce CBD and the fibers from the hemp plant," said Dave Crabill, vice president of IHemp Michigan, an association of farmers, processors and manufacturers across the state.

The group met in Lansing on Monday to talk about the introduction of hemp into Michigan's agriculture industry.

Since the 2018 farm bill legalized hemp production, Michigan started a pilot program, registering and licensing 572 growers, who planned to plant 32,614 acres, and 423 processors. And after planting in the spring and summer, the farmers are in the midst of harvesting their first crop.

The Michigan Department of Agriculture and Rural Development doesn't know yet how many of those acres were actually planted, said Gina Allessandri, the state's industrial hemp program director, but should have a better idea by the end of the year what kind of yield the first crop will produce.

David Connor switched from farming blueberries in Paw Paw, in southwest Michigan, to 26 acres of industrial hemp. This year, he has gotten about 20,000 pounds of hemp that will be split between the hemp flower, which will be used for CBD products, and the hemp stalks that will be used in everything from building materials, textiles and paper materials.

"We're making some great headway in Michigan," he said. "And in 2020, we think it's going to be a huge year for Michigan."

The return on investment is promising, Connor said. An acre of corn in Michigan during 2018, for example, yielded about 153 bushels at $3.55 a bushel, according to the U.S. Department of Agriculture, for a value of $543 per acre. Connor said the market value of the products from the CBD plant could be as high as $10,000 to $12,000 per acre.

"But this is an extremely labor-intensive process," he said, noting that since he's just finishing up his harvest, the market value is still an open question. "But we're very optimistic."

Hemp and marijuana are both cannabis plants, but hemp has much lower concentrations of tetrahydrocannabinol, or THC, the psychoactive component in cannabis that provides the high for users, than marijuana plants. Since 1970, all cannabis has been categorized as a controlled substance and, as such, considered illegal by the federal government.

The 2018 farm bill, however, legalized hemp and provides for regulating the growth of the plant. The fibers and stalks are used for a variety of purposes, including clothing, construction materials, paper, and plastic composites, while the seeds and flowers are used in health food and body care products containing cannabidiol, better known as CBD. The bill also allows for the transportation of hemp-based products across state lines as long as the THC level is below 0.3% level.

The risk involved for hemp farmers in Michigan is that any plant that tests above the 0.3% level has to be destroyed.

CBD-infused products derived from hemp range from tinctures, cream, candy and dog treats to water. CBD is touted, mostly anecdotally, as an ingredient that will do everything from provide relief from chronic pain and anxiety, make your skin smooth and silky, and calm skittish pets. The market for CBD products is expected to grow to $22 billion by 2022.

Casey Yosin, founder and CEO of Total Health Co., a CBD processing facility in Auburn Hills,, transitioned from the building industry to CBD production after a sports injury left him bedridden for six months. He researched the benefits of CBD and started using the plant.

"From my personal experience, I used CBD to heal," he said. "I figured it's something I can do to get out and help people."

An additional benefit for the hemp farmer, said Gary Schuler, founder and CEO of GTF LLC in Grand Rapids, is the ability to use the entire plant. His company dries and processes the hemp waste, which is then used in food products, animal feed, biodegradable plastic and building products.

"We're really helping decrease the carbon footprint," he said, because some of the petroleum-based plastics can be replaced by the biodegradable plastic made from hemp waste.

While waiting for final rules from the U.S. Food and Drug Administration, which will regulate CBD-infused food products, the state plans to continue the hemp program next year and will still register and license anyone who wants to get involved in the program. For more information on the state's industrial hemp program, click here.

The state's other emerging cannabis-based business — marijuana for adult recreational use — will begin after the state begins accepting business license applications on Nov. 1 and awarding licenses by the end of the year.

First lady Melania Trump called on e-cigarette companies to stop advertising to teenagers on Monday while urging youth to avoid the perils of addiction. Appearing at a U.S. Drug Enforcement rally to kick off a drug abuse prevention awareness event, Trump said that young people should be warned about the risks of using e-cigarettes.

“It is important to me that we all work to educate children and families about the dangers associated with this habit,” said the first lady.

The president and Mrs. Trump have a teenaged son, 13-year-old Barron. She also called on manufacturers to end the marketing of e-cigarettes to young people.

“Marketing this addictive product to children must stop,” said Trump.

In September, the Trump administration announced that it was developing plans to issue a federal ban on all flavored e-cigarettes in part as a response to the rash of serious lung injuries linked to vaping that continues to plague the United States.

“The vaping has become a very big business, as I understand it, like a giant business in a very short period of time. But we can’t allow people to get sick and we can’t have our youth be so affected,” the president said.

“We’re going to have to do something about it,” he added.

First Lady Warns of Perils of Drug Addiction

The first lady’s remarks came during a DEA rally to promote the October 23 beginning of Red Ribbon Week, an event that encourages young people to take a pledge to not use drugs. At the rally, Trump also warned the audience of the dangers of drug addiction.

“In my time as first lady, I have traveled to hospital and visited rehabilitation centers where I have seen first-hand the horrible results of drug abuse,” she said. “Our administration will continue working hard in fighting the opioid crisis.”

Trump also said that young people struggling with drug use should be urged to face their addiction and seek treatment.

“We need to continue encouraging teenagers and young adults who have fallen into drug addiction to be brave enough to admit it, to talk about it, and to get help,” urged the first lady.

“Illegal use of drugs destroys too many families in our country. Drugs are taking a toll on our most vulnerable,” she added.

Trump vowed to continue working through her Be Best initiative to help young people avoid drug abuse.

“I will continue to address addiction as long as it affects our children, our youth, and our schools,” she said.

The Royal Australasian College of Surgeons (RACS) is reminding the public that cannabis consumption prior to getting behind the wheel can impair motor and cognitive functions and may double the risk of getting into a crash. The reminder comes on the heels of Canberra’s motion to legalize adult-use cannabis.

The warning resembled those issued by various police commissioners as well as Australian Deputy Prime Minister Michael McCormack.

“Surgeons around Australia witness the carnage from road crashes daily. The ‘silent epidemic’, with 39,000 Australians hospitalised with injury from road crash each year, is not slowing. ACT’s bill legalising recreational cannabis use risks worsening this trend,” RACS trauma chair Dr. John Crozier said in a press release.

Dr. Crozier says that Canberra’s move to legalize cannabis will impede road safety measures implemented by the government.

“The Insurance Institute of Highway Safety (IIHS)’s Highway Loss Data Institution found significant increases in crash incidents in Colorado, Washington, and Oregon following legalising recreational cannabis. There were also increases in the number of drivers involved in fatal crashes who tested positive for cannabis.

“RACS has a long history of road safety advocacy and is strongly committed to reducing deaths and serious injuries on our roads. The College recently backed calls by the Australian Automobile Association for a new federal approach to road safety, and we will continue to advocate strongly in this area,” said Dr. Crozier.

Similar concerns were raised pre-legalization in Canada, where the drug has been federally legal for nearly a year. Despite some authorities’ skepticism, data suggests that there has not been a spike in impaired driving charges since legalization came into force last October.