Canadian cannabis companies were in the spotlight Friday after MKM Partners initiated coverage on seven of them Friday with two buy ratings, three neutral ratings and two getting sell ratings.

MKM gave sell ratings to Curaleaf (CURLF) and Aurora Cannabis (ACB) - Get Report , while Canopy Growth (CGC) - Get Report , Tilray (TLRY) - Get Report and Cronos Group (CGC) - Get Report received neutral ratings. Acreage (ACRGF) and Hexo (HEXO) - Get Report were the two stocks receiving buy ratings. 

The firm sees fundamental issues with the cannabis sector, especially profitability issues despite the fact that cannabis is relatively expensive. 

"Among vice categories, cannabis is the most expensive on a per serving basis (C$2.14) followed by wine (C$2.10), cider (C$1.90), beer (C $1.47), and spirits/liquor (C$1.42)," analyst Bill Kirk wrote in a note to clients. "Despite what appears to be incremental demand, cannabis prices continue to fall. This does not bode well for profitability, especially considering the top-seven cultivators (growers) are already harvesting at a rate nearly equal to legal channel needs in Canada."

Aurora Cannabis shares were falling 2.81% in trading, while Canopy Growth was falling 4.25%. Tilray shares were down 0.5%, Cronos gained 0.44% and  Hexo rose 7.36%

Curaleaf is down 4% and Acreage is up 2.7%.