Sunday , 2 October 2022

4 of 5 Cannabis Categories Declined +20% In April; One Advanced

The cannabis sector consists of 5 distinct categories – LPs, MSOs, psychedelics, auxiliary (i.e. goods and service suppliers) and major company investors – and they each perform quite differently from each other.

By Lorimer Wilson, Founder and Managing Editor, munKNEE.com – Your KEY To Making Money!

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 in April, 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$442M (Organigram) to a high of US$2,250M (Canopy) with an average of US$1,339M.
      • The stock prices ranged from US$1.41 (Organigram) to US$5.71 (Canopy) with an average of US$3.63/share.
    •  The Index went DOWN 27.1% in April and is now DOWN 32.4% YTD and DOWN 88.4% 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$1,295M.
      • The stock prices ranged from a low of US$1.79 (Goodness Growth) to US$14.43 (Trulieve) with an average of US$5.57/share.
    • The Index went DOWN 27.5% in April and is now DOWN 38.6% YTD and DOWN 71.7% 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$110M (Forian) to a high of US$5,780M (Scotts Miracle-Gro) with an average of US$1,657M.
      • The stock prices ranged from a low of US$3.40 (Forian) to US$144.59 (Innovative) with an average of US$44.97/share.
    •  The Index went DOWN 21.1% in April and is now DOWN 41.1% YTD and DOWN 60.7% 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$11.7B (Molson Coors) to a high of US$100.7B (Altria) with an average of US$62.2B.
      • The stock prices ranged from a low of US$21.11 (Imperial Brands) to US$246.09 (Constellation) with an average of US$79.36/share
      • All 6 constituents pay dividends with yields ranging from just 0.9% for Anheuser Busch to 12.0% for Imperial Brands.
    • The Index went UP 3.6% in April, and is now UP 2.4% YTD but is still DOWN 5.2% 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$70M.
      • The market capitalization of the above stocks ranged from a low of US$61.5M (Zynerba) to a high of US$94.6M (Cybin) with an average of US$70.6M.
      • The stock prices ranged from a low of US$0.35 (Numinus) to US$1.41 (Zynerba’s 52-week low) with an average of US$0.79/share.
    • The Index went DOWN 26.9% in April 22nd, and is now DOWN 54.2% YTD and DOWN 83.2% 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$368M (Mind Medicine) to a high of US$884M (GH Resources) with an average of US$637.7M.
    • The stock prices ranged from a low of US$0.80 (Mind Medicine) to US$14.63 (GH Resources) with an average of US$7.20/share.
    •  These 4 stocks went DOWN 23.3% in April, and are now collectively DOWN 47.1% YTD and DOWN -71.6% from its peak in 2021. 

In Summary

Below is a summary as to how the 5 cannabis categories performed for the week ending April 22nd, in descending order:

  1. The Conservative Pot Stocks Index
    • went UP 3.6% in April, and is now
    • UP 2.4% YTD but is still
    • DOWN 5.2% from its peak in 2021.
  2. The Ancillary Pot Stock Index
    • went DOWN 21.1% in April, and is now
    • DOWN 41.1% YTD and
    • DOWN 60.7% from its peak in 2021.
  3. The Pure-Play Psychedelic Compounds-Based Stocks Index 
    • went DOWN 26.9% in April, and is now
    • DOWN 54.2% YTD and
    • DOWN 83.2% from its peak in 2021.
  4. The Pure-Play Canadian LP Pot Stock Index
    • went DOWN 27.1% in April, and is now
    • DOWN 32.4% YTD and
    • DOWN 88.4% from its peak in February 2021.
  5. The Pure-Play American MSO Pot Stock Index
    • went DOWN 27.5% in April, and is now
    • DOWN 38.6% YTD and
    • DOWN 71.7% from its peak in February 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.