Tuesday , 17 May 2022

All 5 Cannabis Categories Were Down Week-ending May 6th

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

By Lorimer Wilson, Founder & Managing Editor of munKNEE.com and a frequent contributor to eResearch.com, usfinancepost.com, bitgrum.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 first 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$442M (Organigram) to a high of US$2,350M (Canopy) with an average of US$1,319M.
      • The stock prices ranged from US$1.34 (Organigram) to US$5.97 (Canopy) with an average of US$3.56/share.
    •  The Index went DOWN 1.8% during the first week in May and is now DOWN 33.6% YTD and DOWN 88.6% 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$4,220M (Curaleaf) with an average of US$1,290M.
      • The stock prices ranged from a low of US$1.65 (Goodness Growth) to US$14.80 (Trulieve) with an average of US$5.29/share.
    • The Index went DOWN 5.0% during the first week of May and is now DOWN 50.2% YTD and DOWN 73.1% 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$1,602M.
      • 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 4.7% during the first week of May and is now DOWN 43.9% YTD and DOWN 65.1% 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$20.79 (Imperial Brands) to US$247.47 (Constellation) with an average of US$79.02/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 0.4% during the first week of May, and is now UP 2.0% YTD but is still DOWN 5.6% 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$50.2M (Field Trip) to a high of US$84.6M (Cybin) with an average of US$64.2M.
      • The stock prices ranged from a low of US$0.32 (Numinus 52-week low) to US$1.25 (Zynerba 52-week low) with an average of US$0.71/share.
    • The Index went DOWN 10.3% during the first week of May, and is now DOWN 58.9% YTD and DOWN 85.0% 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$350M (Mind Medicine) to a high of US$624M (GH Resources) with an average of US$487M.
    • The stock prices ranged from a low of US$0.83 (Mind Medicine) to US$12.00 (GH Resources’ 52-week low) with an average of US$6.25/share.
    •  These 4 stocks went DOWN 13.2% during the first week of May, and are now collectively DOWN 54.1% YTD and DOWN 75.4% from its peak in 2021. 

In Summary

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

  1. The Conservative Pot Stocks Index
    • went DOWN 0.4% during the first week of May, and is now
    • UP 2.0% YTD but is still
    • DOWN 5.6% from its peak in 2021.
  2. The Pure-Play Canadian LP Pot Stock Index
    • went DOWN 1.8% during the first week of Mayand is now
    • DOWN 33.6% YTD and
    • DOWN 88.6% from its peak in February 2021.
  3. The Ancillary Pot Stock Index
    • went DOWN 4.7% during the first week of May, and is now
    • DOWN 43.9% YTD and
    • DOWN 65.1% from its peak in 2021.
  4. The Pure-Play American MSO Pot Stock Index
    • went DOWN 5.0% during the first week of May, and is now
    • DOWN 50.2% YTD and
    • DOWN 73.1% from its peak in February 2021.
  5. The Pure-Play Psychedelic Compounds-Based Stocks Index 
    • went DOWN 10.3% during the first week of May, and is now
    • DOWN 58.9% YTD and
    • DOWN 85.0% 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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