After that loss, he probably got depressed, smoked some weed... and then BOOM popped positive for THC/Marijuana on the State Athletic Commissions random drug screening.
Honestly, I don't care for Marijuana and believe that it does many things... but enhance your performance in a cage... NOT SO MUCH. I would honestly see it hurting you more then helping you in a MMA Bout.
As for the retirement, I would be ABSOLUTELY SHOCKED if he actually went through with it. He is in his prime with a bunch of money to be made in the sport. I don't foresee Nick Diaz going away ANYTIME SOON.