American Cannabis Operator Index Declines 2.2% in December

The American Cannabis Operator Index fell again for the ninth consecutive month, declining 2.2% to 43.27:

While it gave up a bit of ground in December relative to the rest of the market, the index declined 14.5% in Q4 compared to a sharper drop in the Global Cannabis Stock Index, which declined 20.8% during the quarter. The index, which launched at the end of October 2018 with a value of 100, reached a closing high of 124.16 a week later before declining to 70.64 in late December. In 2019, it rallied as high as 119.53 in early April before selling off over the balance of the year. This past month, it ended 10.0% above the 2019 low set on December 18th at 39.35 and declined 44.0% in 2019:

During December, the index included 23 companies, including 19 multi-state operators (MSOs) and 3 focused solely on CBD extracted from industrial hemp. Several MSOs are pursuing CBD strategies apart from their state-licensed cannabis businesses. 6 companies managed double-digit gains, while 9 posted double-digit losses, including 4 that lost more than 25% of their value:

The four best performing stocks were Origin House (CSE: OH) (OTC: ORHOF), Cresco Labs (CSE: CL) (OTC: CRLBF), Harvest Health and Recreation (CSE: HARV) (OTC: HRVSF) and Planet 13 Holdings (CSE: PLTH) (OTC: PLNHF).  Origin House advanced on the strength of Cresco Labs ahead of its pending merger, with shareholders set to receive .7031 shares of Cresco Labs for each Origin House share. The discount to the price implied by the deal narrowed during the month from 16% to about 5% as it became clear that shareholders would approve the deal. Cresco Labs rallied back from extreme weakness late November and early in the month, when it posted a 2019 low, as traders gravitated toward the company ahead of Illinois legalizing. Harvest Health moved to the top of its three-month trading range after raising substantial debt capital during December. Planet 13 rallied for the second straight month and ended Q4 with a gain of almost 9%.

The four worst performing stocks were Green Growth Brands (CSE: GGB) (OTC: GGBXF), cbdMD (NYSE American: YCBD), Halo Labs (NEO: HALO) (OTC: AGEEF) and  TILT Holdings (CSE: TILT) (OTC: TLLTF). Green Growth Brands walked away from its pending deal with Moxie during the month. During Q4, it declined almost 39%. cbdMD fell after a weak Q4 financial report. Halo Labs retreated in December after a strong rally in November following the release of its Q3 financials. TILT Holdings gave up most of the big gains from the prior month, when it  had been the best performer after securing financing.

For January, the number of names in the index will will decline to 19. We are increasing the minimum price to US$0.25, which requires the removal of Halo Labs and Terra Tech (OTC:TRTC). Additionally, We are removing Origin House ahead of closing its merger in mid-January with Cresco Labs.  Finally, Tilt Holdings no longer qualifies, as its direct cannabis sales are less than 50% of overall company revenue.

In the next monthly review, we will summarize the performance for January and discuss any additions or deletions. Be sure to bookmark the page to stay current on American cannabis operators stock price movements within the day or from day-to-day.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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