Sunday , 3 July 2022

3 of 5 Cannabis Categories Declined During Third Week Of May

The cannabis sector consists of 5 distinct categories and they each performed quite differently from each other during the third week of May.

By Lorimer Wilson, Founder & Managing Editor of munKNEE.com and a frequent contributor to eResearch.comusfinancepost.combitgrum.com and talkmarkets.com.

Below are the 5 categories that are tracked by my proprietary indices, the constituents in each index with their low/average/high market capitalizations and low/average/high stock price performances, and each category’s average stock performance during the third week of May, YTD and from their peaks in 2021:

  1. The Pure-Play Canadian LP Pot Stock Index

    • The Index consists of the 5 largest Canadian Licensed Producers, namely, Aurora (ACB); Canopy Growth (CGC); Cronos (CRON);   Organigram  (OGI) and Tilray (TLRY) which trade for at least US$1/share on the Canadian and/or American stock exchanges and have a market cap in excess of US$400M.
      • The market capitalization of the above stocks ranged from a low of US$420M (Organigram) to a high of US$2,350M (Canopy) with an average of US$1,319M.
      • The stock prices ranged from US$1.21 (Organigram) to US$5.52 (Canopy) with an average of US$3.55/share.
    •  The Index went DOWN 0.2% during the third week in May and is now DOWN 33.8% YTD and DOWN 88.7% from its peak in February 2021. 
  2. The Pure-Play American MSO Pot Stock Index

    • The Index consists of the 13 largest American Multi-State Operators, namely, Acreage (ACRDF/ACRHF); Ascend Wellness  (AAWH); Ayr Wellness (AYRWF); Columbia Care (CCHWF); Cresco  (CRLBF); Curaleaf (CURLF); Goodness Growth (GDNSF); Green Thumb (GTBIF); Jushi (JUSHF); Planet 13 (PLNHF);  TerrAscend  (TRSSF); Trulieve  (TCNNF) and Verano (VRNOF) which trade for at least US$1/share on the Canadian and/or American stock exchanges and have a market cap of at least US$200M.
      • The market capitalization of the above stocks ranged from a low of US$211M (Goodness Growth) to a high of US$4,160M (Curaleaf) with an average of US$1,290M.
      • The stock prices ranged from a low of US$1.56 (Goodness Growth) to US$15.16 (Trulieve) with an average of US$5.28/share.
    • The Index went UP 3.0% during the third week of May and is now DOWN 41.8% YTD and DOWN 73.2% from its peak in February 2021.
  3. The Ancillary Pot Stock Index

    • The Index consists of the 7 largest companies providing goods and services to the cannabis sector, namely, AFC Gamma (AFCG);  Forian (FORA); GrowGeneration (GRWG); Hydrofarm (HYFM);  Innovative Industrial Properties (IIPR); Scotts Miracle-Gro Company (SMG) and Turning Point Brands (TPB) which trade for at least US$1/share on the Canadian and/or American stock exchanges and have a market cap of at least US$100M.
      • The market capitalization of the above stocks ranged from a low of US$102M (Forian) to a high of US$5,820M (Scotts Miracle-Gro) with an average of US$1,600M.
      • The stock prices ranged from a low of US$2.92 (Forian) to US$131.21 (Innovative) with an average of US$40.15/share.
    •  The Index went DOWN 5.8% during the third week of May and is now DOWN 47.4% YTD and DOWN 64.9% from its peak in 2021. 
  4. The Conservative Pot Stocks Index

    • The Index consists of 6 tobacco, beer and liquor companies that have invested heavily in the cannabis industry, namely, Altria Group (MO); Anheuser-Busch (BUD); British American Tobacco  (BTI); Constellation Brands (STZ); Imperial Brands (IMBBY) and  Molson Coors Brewing Company (TAP).
      • The market capitalization of the above stocks ranged from a low of US$11.5B (Molson Coors) to a high of US$102.4B (Altria) with an average of US$62.2B.
      • The stock prices ranged from a low of US$22.67 (Imperial Brands) to US$234.50 (Constellation) with an average of US$76.15/share
      • All 6 constituents pay dividends with yields ranging from just 1.0% for Anheuser Busch to 12.1% for Imperial Brands.
    • The Index went DOWN 4.3% during the third week of May, and is now DOWN 1.7% YTD and DOWN 9.0% from its peak in 2021.
  5. The Pure-Play Psychedelic Compounds-Based Stocks Index 

    • The Index consists of 6 psychedelic and marijuana (THC) drug companies in the clinical stages of research and development of treatments for a wide variety of mental illnesses, namely, Allied (ALID); Cybin (CYBN); Field Trip (FTRP); Numinus (NUMIF);   Seelos (SEEL) and Zynerba (ZYNE) which trade on the Canadian and/or American stock exchanges and have market caps of at least US$60M.
      • The market capitalization of the above stocks ranged from a low of US$40.9M (Zynerba) to a high of US$67.9M (Cybin) with an average of US$57.6M.
      • The stock prices ranged from a low of US$0.30 (Numinus) to US$0.96 (Zynerba) with an average of US$0.68/share.
    • The Index went UP 8.5% during the third week of May, and is now DOWN 60.5% YTD and DOWN 85.6% from its peak in 2021. 

Four other companies with market caps in excess of US$400M are followed but are not included in the Index due to their size, namely, Atai (ATAI);  Compass Pathways (CMPS); GH Resources (GHRS) and Mind Medicine  (MNMD).

  • The market capitalization of the above stocks ranged from a low of US$320M (Compass Pathway) to a high of US$580M (Atai) with an average of US$437M.
    • The stock prices ranged from a low of US$0.77 (Mind Medicine) to US$10.04 (GH Resources) with an average of US$5.79/share.
    •  These 4 stocks went UP 6.2% during the third week of May, and are now collectively DOWN 57.4% YTD and DOWN 77.2% from their peak in 2021. 

In Summary

Below is a summary as to how the 5 cannabis categories performed during the third week of May, YTD, and from their peaks in 2021, in descending order:

  1. The Pure-Play Psychedelic Compounds-Based Stocks Index 
    • went UP 8.5% during the third week of May, and is now
    • DOWN 60.5% YTD and
    • DOWN 85.6% from its peak in 2021.
  2. The Pure-Play American MSO Pot Stock Index
    • went UP 3.0% during the third week of May, and is now
    • DOWN 41.8% YTD and
    • DOWN 73.2% from its peak in February 2021.
  3. The Pure-Play Canadian LP Pot Stock Index
    • went DOWN 0.2% during the third week of Mayand is now
    • DOWN 33.8% YTD and
    • DOWN 88.7% from its peak in February 2021.
  4. The Conservative Pot Stocks Index
    • went DOWN 4.3% during the third week of May, and is now
    • DOWN 1.7% YTD but is still
    • DOWN 9.0% from its peak in 2021.
  5. The Ancillary Pot Stock Index
    • went DOWN 5.8% during the third week of May, and is now
    • DOWN 47.4% YTD and
    • DOWN 64.9% from its peak in 2021.

Having the cannabis sector analyzed in such a fashion highlights the disparity between the 5 categories and, I hope, provides you with the information necessary to decide which, if any, category to invest in.

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