Canadian pot stocks, most with little or no revenue, are quickly becoming among the most actively traded stocks on the country’s exchanges, topping blue-chip companies like BCE Inc. and Manulife Financial Corp.

Canopy Growth Corp. and Aurora Cannabis Inc. were the fourth- and fifth most-traded stocks by value on the S&P/TSX Composite Index over the past three months, with only the three biggest banks posting higher dollar volume.

The two pot stocks alone combined for more than $500 million a day in trading activity, providing a boost to the exchanges and to the banks that are ramping up lending and support to the nascent industry as legalization approaches this year.

While the bulk of trading is done by individual investors tracking last year’s surge and this year’s decline, the heavy volume suggests institutional money is starting to take note of the fledgling sector that some analysts say could be worth as much as $12 billion a year in sales.

On average, $291 million worth of Canopy shares and $280 million in Aurora shares traded hands on a daily basis over the last three months, according to data compiled by Bloomberg. That puts the cannabis producers ahead of companies like Enbridge Inc. ($279 million), Manulife Financial ($200 million) and BCE Inc. ($174 million).

Total value traded on the Toronto Stock Exchange rose 7.6 per cent in the first quarter from a year earlier to $429.4 billion, according to data from TMX Group Ltd.

Cannabis stocks are still largely owned by retail investors who tend to have a “herd mentality both on the way in and on the way out,” said Charles Taerk, chief executive officer at Faircourt Asset Management Inc., which runs the cannabis-focused UIT Alternative Health Fund.

The BI Canada Cannabis Competitive Peers index has lost about a third of its value this year after nearly tripling in 2017. This has prompted spikes in volume as investors rush to take profits or avoid further losses.

“You’re getting a lot of panic selling, a lot of stop-loss selling,” said Vahan Ajamian, analyst at Beacon Securities Ltd. “I think predominantly that’s retail investors seeing buying opportunities and jumping in, or thinking, ‘Oh my god, this is going lower, I’ve got to get off.”’

However, there’s also growing institutional interest in the space as the Canadian government moves closer to legalizing recreational use. Cronos Group Inc.’s institutional fund flows spiked after it became the first Canadian pot producer to list on the Nasdaq in February, and Canopy and Aurora have said they may follow suit.

Meanwhile, Bank of Montreal was the first major Canadian bank to arrange a stock sale for a pot firm in January when it helped lead a C$200.7 million equity financing for Canopy, which has joined Canada’s equity benchmark along with Aurora and Aphria Inc. Coverage of the industry’s biggest players has also been growing, with Bank of Montreal appointing Tamy Chen as its cannabis analyst. Canopy now has 11 firms following it, including European investment bank Bryan Garnier & Co.

“We are seeing much more interest in cannabis companies from large institutions,” Ajamian said. “Now if you don’t own these stocks, you have some explaining to do.”

--With assistance from Doug Alexander