American Cannabis Operators Index Suffers Sharp Decline in July

The American Cannabis Operator Index extended its post-March weakness again, declining almost 16% to 73.66:

The index, which launched at the end of October with a value of 100, traded as low as 70.64 in late December after having reached a closing high of 124.16 in early November. It is now just 4.3% above the December 24th low and is down 4.7% in 2019:

During July, the index included 29 companies, including 24 multi-state operators (MSOs) and 5 focused solely on CBD extracted from industrial hemp. Several MSOs are pursuing CBD strategies apart from their state-licensed cannabis businesses. 3 companies managed double-digit gains, while 21 posted double-digit losses, including 3 that lost more than 25% of their value:

DionyMed Brands (CSE: DYME) (OTC: DYMEF) led the way, rallying 51% after securing financing from cannabis REIT Innovative Industrial Properties (NYSE: IIPR) that allowed it to close a transaction that will expand its distribution and delivery operations to Southern California. The stock had declined 46% in June. Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), which fell sharply in May after pricing a secondary offering at C$20, extended its recovery, gaining more than 20%. Curaleaf Holdings (CSE: CURA) (OTC: CURLF) rallied 10% after announcing the pending acquisition of privately-held MSO GrassRoots Cannabis. The two worst performers are CBD players. Isodiol International (CSE: ISOL) (OTC: ISOLF) failed to meet the reporting deadline for filing its annual financials.

During the month, we noted a divergence between the smaller operators and the largest ones, which we shared in our newsletter published on July 14th. Most of the largest companies in the index are up more than 10% year-to-date as of the end of July, while some of the smaller ones have lost more than half their value. Concurrent with the lower prices of smaller operators, their trading volumes have evaporated, leading to their failure to maintain the minimum qualifying standards to remain in the index. For July, the index included 29 names, but, after two additions and six removals, the index will include 25 names in August.

Joining the index are United Cannabis (OTC: CNAB), which rejoins after having been previously removed, and Sunniva (CSE: SNN) (OTC: SNNVF), which began reporting qualifying revenue from its California operations. The stocks being removed, some of which were among the worst performers during the month, include 1933 Industries (CSE: TGIF) (OTC: TGIFF), 4Front Ventures (CSE: FFNT) (OTC: CNXXF),  Body and Mind (CSE: BAMM) (OTC: BMMJ), Cansortium (CSE: TIUM) (OTC: CNTMF), Halo Labs (NEO: HALO) (OTC: AGEEF) and Isodiol Internatiol.

In the next monthly review, we will summarize the performance for August 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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