American Cannabis Operator Index Soars 40% in November

The American Cannabis Operator Index exploded higher in November, jumping 40.0% to 57.93:

After ending 2019 at 43.27, the index has now advanced 32.5% in 2020 and has rebounded 255.4% from an all-time closing low on March 18th at 14.50:

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 2018. It then rallied as high as 119.53 in early April 2019 before selling off over the balance of the year and into March 2020:

During November, the index included 17 companies, including 14 multi-state operators (MSOs) and 3 focused solely on CBD extracted from industrial hemp. Three companies posted gains in excess of 50%, while none rose by less than 10%:

The four best performing stocks included Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), TerrAscend (CSE: TER) (OTC: TRSSF), Planet 13 (CSE: PLTH) (OTC: PLNHF) and Ayr Strategies (CSE: AYR.A) (OTC: AYRSF). Charlotte’s Web, which is down 32% year-to-date, had sold off sharply over the summer following its acquisition of Abacus Health Products for stock, an equity offering and disappointing Q2 financials. In November, it reported a better Q3, with its CBD business growing again. TerrAscend, which has rallied 431% in 2020 and was the best performer in October, was strong ahead of the NJ adult-use ballot initiative last month and likely benefited from its passage this month. The company boosted its 2020 outlook and provided guidance for revenue and adjusted EBTITDA to expand sharply in 2021 when it reported its Q3 financials during the month, suggesting that revenue will be at least C$196 million in 2020 and C$360 million next year, with adjusted EBITDA in excess of C$54 million in 2020 and C$140 million in 2021. Planet 13 posted very strong financial performance in Q3 despite the slow recovery of tourism in Las Vegas, with revenue expanding 111% sequentially and 36% from a year ago. The company expects to open its first dispensary outside of Nevada in 2021, in California, and its stock has gained 156% year-to-date. Ayr Strategies, like Planet 13, rebounded sharply in Nevada as well as in Massachusetts, reporting sequential revenue growth of 61%, with adjusted EBITDA more than doubling sequentially to $19.3 million, 42% of revenue, in Q3. The company announced its entry into Arizona through a pending acquisition and began to close some of its other acquisitions that will expand its operations in the northeast to Ohio and Pennsylvania. Its stock has rallied 125% in 2020.

The four worst performing stocks, all of which rallied, included Liberty Health Sciences (CSE: LHS) (OTC: LHSIF), Curaleaf (CSE: CURA) (OTC: CURLF), Columbia Care (CSE: CCHW) (NEO: CCHW) (OTC: CCHWF) and Trulieve (CSE: TRUL) (OTC: TCNNF). Liberty Health Sciences has been one of the weakest names in the index among licensed cannabis operators in 2020, declining 20% this year. Weekly data shows that the company is not only losing market share in Florida but also that its unit sales are declining on a quarterly basis. The other three weakest performers are among the largest MSOs, which generally lagged their smaller peers. Additionally, these three reported results that were reasonably in line with prior expectations when they reported Q3 financials during the month rather than beating estimates. Curaleaf, which is up 74% in 2020, and Columbia Care, which has gained 74% as well, have both recently closed stock-based acquisitions, and some of that stock is free-trading, which may have weighed on the returns in November. Trulieve, which remains the most profitable MSO, grew revenue 13% during Q3 compared to Q2 and 51% compared to a year ago, well below its peers. The company closed two acquisitions in Pennsylvania during the month which will help drive growth in 2021. Its stock is up 152% in 2020.

For December, the number of names in the index will increase to 20 with the addition of Harborside (CSE: HBOR) (OTC: HBORF) MariMed (OTC: MRMD) and Red White & Bloom (CSE: RWB) (OTC: RWBYF)

In the next monthly review, we will summarize the performance for December 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.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 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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