One of the world's largest marijuana IPOs is a bust

Blair Gable/Reuters

Marijuana.

Canada's largest marijuana IPO is a bust.

Medreleaf (LEAF), Canada's second largest licensed medical marijuana grower, plunged 28% in its trading debut on the Toronto Stock Exchange on Wednesday morning. It marks the biggest drop for a Canadian IPO since 2001, Bloomberg notes.

The company raised $100 million in the offering at a valuation of just under $900 million. Shares were initially priced at $9.50, yet fell to as low as $6.81.

The stock traded almost 500, 000 shares in the first ten minutes of trading, notes New Cannabis Ventures.

Medreleaf sold 80% of the shares with existing shareholders selling the last 20% in a secondary offering. Seeking Alpha noted in May that the optics of this secondary offering may be problematic.

The sellers - most of whom are directors at Medreleaf - were put in a position of encouraging investors to buy the shares that they themselves were selling, notes Seeking Alpha.

Frank Lane, the president of Cannabis FN, a financial network for the cannabis industry, declined to comment directly on Medreleaf but said the drop is a "temporary setback" for the cannabis industry

He said the drop could be due to funding problems resulting from Canadian banks pulling back their capital commitments to cannabis companies.

Canada is also in between "market moving catalysts," Lane added, so there's a "lack of positive news pushing the market forward," such as Prime Minister Trudeau's announcement that the government would legalize recreational marijuana federally.

Trudeau's government plans to legalize marijuana by July 1, 2018.

Medreleaf is the fourth publicly-traded marijuana stock listed in Canada. Canopy Growth Corp. (WEED), was trading down 1.91% at the time of this writing.