How to Short Cannabis Stocks
Short selling, put options, and risk controls for trading against TLRY, CGC, MSOS, MSOX, and the cannabis sector.
High-volatility sector
Cannabis stocks can rally violently on legalization headlines, rescheduling rumors, financing news, or short squeezes. Shorting them can lose money fast, even when the long-term business case looks weak. This is educational content only.
Fast answer: 4 ways to short cannabis
- Short the stock directly: borrow shares of TLRY, CGC, MSOS, or another cannabis ticker in a margin account, then buy them back later.
- Buy put options: define your max loss upfront by buying puts on optionable cannabis names.
- Use bearish option spreads: put spreads or call credit spreads can lower cost, but cap profit and add execution complexity.
- Short a leveraged product: MSOX is a 2x long cannabis ETF. Shorting it is extremely risky, but some traders use it as a higher-beta sector expression.
There is no clean, liquid US-listed inverse cannabis ETF comparable to SQQQ for the NASDAQ or SPXU for the S&P 500. That means cannabis bears usually have to use margin shorts or options instead of simply buying an inverse fund.
Cannabis tickers: 1-year rip, long-term wreckage
The recent move has been sharp, which is exactly why short timing matters. As of April 23, 2026, these tickers were up over the past year, but the multi-year returns still show how much value the sector destroyed after the cannabis bubble.
| Ticker | What it is | 1-year return | Long-term return |
|---|---|---|---|
| TLRY | Tilray Brands | +80.8% | -94.9% over 5 years |
| CGC | Canopy Growth | +24.6% | -99.4% over 5 years |
| MSOS | AdvisorShares Pure US Cannabis ETF | +110.6% | -87.1% over 5 years |
| MSOX | AdvisorShares MSOS 2x Daily ETF | +26.5% | -99.3% since August 2022 |
Returns use Yahoo Finance daily close data through April 23, 2026. MSOX launched in 2022, so it does not have a 5-year record.
Method 1: short TLRY, CGC, or MSOS directly
Traditional short selling is the purest bearish trade. You borrow shares from your broker, sell them, and hope to repurchase them lower. It can work well when a weak cannabis rally fades, but the risks are real:
- Unlimited loss risk: a stock can rise far more than 100%, while your maximum gain is capped at 100% if it goes to zero.
- Borrow fees: hard-to-borrow cannabis names can become expensive to hold short.
- Forced buy-ins: your broker can close the short if borrow disappears.
- Headline squeezes: legalization and rescheduling headlines can trigger sudden sector-wide rallies.
Method 2: buy puts on cannabis stocks or ETFs
Put options are often cleaner for traders who want bearish exposure without unlimited loss risk. A put gives you the right to sell shares at a set strike price before expiration. If TLRY, CGC, MSOS, or MSOX falls below your strike enough to cover the premium, the put can profit.
For cannabis, puts can be useful because the sector is volatile and borrow can get messy. The tradeoff is time decay: if the ticker chops sideways or rallies first, the option can lose value even if your bearish thesis later proves right.
| Options approach | Best for | Main risk |
|---|---|---|
| Long puts | Defined-risk bearish bets | Premium decay and bad timing |
| Put debit spreads | Lower-cost bearish trades | Capped upside if the stock collapses |
| Call credit spreads | Betting a rally fades below a level | Losses if the squeeze keeps going |
| Short calls | Advanced traders only | Potentially unlimited loss |
Method 3: trade MSOS vs MSOX
MSOS is a cannabis sector ETF. MSOX is designed to deliver 2x the daily move of MSOS before fees and tracking differences. Because MSOX is leveraged and resets daily, it can decay badly over time, especially in volatile markets.
That makes MSOX tempting for bearish traders, but it is not a casual short. A sharp rally in MSOS can be amplified in MSOX, and shorting a leveraged ETF still carries margin risk. Many traders prefer buying puts or using spreads so the maximum loss is defined upfront.
Why cannabis is hard to short
The bearish case is easy to understand: dilution, weak profitability, regulatory uncertainty, tax burdens, competition from illicit markets, and years of broken investor promises. The hard part is timing. A hated sector with heavy short interest can rip for weeks on a policy headline before fundamentals matter again.
A more disciplined cannabis short plan usually defines the ticker, entry level, max loss, catalyst, and time frame before the trade. Without that, the sector can turn a correct long-term opinion into a very expensive short-term trade.