Following up on our discussion in early 2021 about how cannabis investors have embraced publicly traded ancillary companies, New Cannabis Ventures launched its seventh proprietary index, the Ancillary Cannabis Index, at the end of March.
The index has significantly outpaced the overall market since the launch, but in January it fell substantially more than than the New Cannabis Ventures Global Cannabis Stock Index, declining 16.5% to 53.69, much worse than the 12.9% decline in the Global Cannabis Stock Index:
The index has declined 46.3% since its introduction at the end of March compared to the decline of 54.2% in the Global Cannabis Stock Index:
The Ancillary Cannabis Index includes companies that provide goods and services to cannabis operators. Initially, each qualifying company was required to trade at a minimum of $0.50 per share with a minimum average daily trading value of $500K at the time the index is rebalanced each month. At the end of October, we raised the minimum average daily trading value to $1 million. Additionally, members of the index must generate at least $1 million per quarter from its ancillary operations.
During January, the index included 14 members, with 1 posting a gain and 3 declining by more than 30%, with a median return of -16.6%:
The three strongest stocks included Chicago Atlantic (NASDAQ: REFI), Scotts Miracle-Gro (NYSE: SMG) and Turning Point Brands (NYSE: TPB). Chicago Atlantic is a recent IPO, while both Scotts Miracle-Gro and Turning Point Brands are diversified businesses that have only partial exposure to cannabis.
The three weakest names during the month included GrowGeneration (NASDAQ: GRWG), Agrify (NASDAQ: AGFY) and Hydrofarm (NASDAQ: HYFM). GrowGeneration pre-announced a substantial revenue short-fall, while Agrify priced an equity offering near the end of the month.
For February, we have added NewLake Capital (OTC: NLCP) and have removed Akerna and Greenlane after they no longer met the minimum trading volume, reducing the index to 13 members.
In the next monthly review, we will summarize the performance for February and discuss any additions or deletions. Be sure to bookmark the page to stay current on ancillary cannabis company stock price movements within the day or from day-to-day.