Canadian cannabis company Cronos Group, Inc. (CRON) fell by nearly 30% on Thursday following a damning prediction by Citron Research's famous short-seller Andrew Left.

According to MarketWatch, Left published a so-called "reality check" about the company and the future of the legal cannabis industry in general. Along with other factors, most importantly growing concerns about a federal pushback against marijuana legalization, Left's report seems to have deflated several stocks in the burgeoning space. Along with CRON's decline, fellow Canadian rivals Canopy Growth Corp. (CGC) and Tilray Inc. (TLRY) both fell, though by much smaller margins. (See also: Marijuana ETF Attracts $22 Million in August)

Beverage-Company Boost Over?

In the past several days, weed companies like Cronos have seen their stocks lift off thanks to news that beverage companies might be looking toward the new industry. Constellation Brands Inc. (STZ), the maker of Corona, announced a $4 billion investment in Canopy, while rival beverage company Diageo PLC (DEO) reportedly considered a similar partnership with several other Canadian cannabis companies.

Citron's note seems to have burst a bubble of excitement across the growing industry. In it, Left pointed out that while the end of 100 years of marijuana prohibition in Canada does suggest tremendous potential for the legal weed space, it's extremely likely that the current pool of more than 100 licensed producers will become much smaller. Citron urges investors to be particularly cautious when it comes to Cronos, as Cronos has not been disclosing the size of its agreements across Canada's provinces. This is in contrast with other major players in Canada's legal cannabis industry. (See also: Pot Stocks at Bitcoin Levels, Go Short Tilray: Jason Spatafora)

Canadian Provinces Haven't Made Guarantees to Buy Pot

According to MarketWatch, GMP Securities analyst Martin Landry explained earlier this week that Canadian provinces have not made guaranteed commitments to buy pot from particular suppliers, even though multiple providences have announced a list of suppliers as of this time. Instead, Landry suggests, the provinces will buy from a list of suppliers and will replenish their stocks as necessary and based on which products sell the best. The reason for this is simply that the provinces cannot predict which products customers will actually prefer.

Citrons indication that it was shorting Cronos may also have played a major role in the company's recent decline in stock price. S3 Partners' managing director of predictive analytics, Ihor Dusaniwsky, explained that "the shorts are coming off just a little now, but nobody is running for the woods," adding that" [short sellers] got smacked around and they're waiting for a reversal" after the recent price boosts. Citron also pointed to contaminated products as a lingering concern for Cronos investors, as well as the fact that international sales account for just 6% of the top line.