The Global Cannabis Stock Index gave up all of its gains from July and August to end Q3 down 6.7%, decreasing 16.2% in September to 27.45:
The index, which had 37 qualifying members during the month (Acreage Holdings was removed late in the month after its corporate action resulted in its stock being split into two new stocks) following the quarterly rebalancing at the end of June, declined 34.1% in 2019 to 42.20 and is now down 35.0% in 2020:
After posting an all-time closing low of 16.95 set on March 18th, the index has rallied sharply to end the month 61.9% higher but still down almost 85% from its early 2018 closing high at 180.02:
The strongest 4 names in September, all of which trade on higher exchanges, failed to generate significant gains:
- 22nd Century Group (NYSE American: XXII): +8.6%
- Innovative Industrial Properties (NYSE: IIPR) +0.8%
- GrowGeneration (NASDAQ: GRWG): +0.1%
- Power REIT (NYSE: PW): -2.6%
22nd Century Group, which is more leveraged to tobacco than cannabis, has declined 42% in 2020. Innovative Industrial Properties, which has rallied 64% this year, announced additional projects in Michigan and Florida during September and also boosted its dividend by 10%. Executive Chairman Alan Gold made a substantive sale, disposing of 5000 shares at $125.08
The best performer in August was GrowGeneration, which sold $48 million of stock in a public offering at $5.60 in late June and then soared to an all-time high of $22.88 in July before a short-report was published. During August, several analysts boosted their targets. GrowGen is up 290% in 2020. Power REIT, which is up 120% in 2020, has been expanding its presence in the industry, including additional projects in Colorado and Maine announced during September.
The 4 weakest names fell by more than 33% in September:
- Aurora Cannabis (TSX: ACB) (NYSE: ACB): -52.6%
- Mydecine Innovations Group (CSE: MYCO) (OTC: MYCOF): -51.6%
- Akerna (NASDAQ: KERN): -39.8%
- Green Organic Dutchman (TSX: TGOD) (OTD: TGODF): -32.6%
Aurora Cannabis, which ended September down 82% year-to-date, fell sharply after its Q4 earnings report. Mydecine ran up in May and continued its downward trend from early June during September. Akerna saw the founder of a company it recently acquired quit abruptly and issue criticism. Additionally, its Q4 financial report was disappointing, as revenue fell sequentially and from a year ago due to COVID-19 issues, according to the company. Akerna has declined 57% in 2020. Green Organic Dutchman, which is down 65% this year, sold stock late in the month.
The rebalancing process for Q4 resulted in the addition of six companies and the removal of ten, leaving the index with 32 members. The criteria used for the rebalancing were the same as for Q3, with stocks required to have a minimum price of $0.25 and to have average daily traded value in excess of $500K.
The removed companies, beyond Acreage Holdings, include 22nd Century Group (NYSE: American: XXII), Akerna (NASDAQ: KERN), CV Sciences (OTC: CVSI), FSD Pharma (CSE: HUGE) (NASDAQ: HUGE), Greenlane Holdings (NASDAQ: GNLN), Green Organic Dutchman (TSX: TGOD) (OTD: TGODF), KushCo Holdings (OTC: KSHB), Mydecine Innovations Group (CSE: MYCO) (OTC: MYCOF), Sundial Growers (NASDAQ: SNDL) and TILT Holdings (CSE: TILT) (OTC: TLLTF). Low trading volumes led to the removal of 22nd Century Group, Akerna, CV Sciences, Greenlane, KushCo Holdings and TILT Holdings, while Green Organic Dutchman, Mydecine and Sundial were below the minimum price. FSD Pharma was removed after it relinquished its license in Canada.
The added names include AYR Strategies (CSE: AYR) (OTC: AYRSF), India Globalization Capital (NYSE American: IGC), Jushi Holdings (CSE: JUSH) (OTC: JUSHF), Taat Lifestyle & Wellness (CSE: TAAT) (OTC: TOBAF), TerrAscend (CSE: TER) (OTC: TRSSF) and Vireo Holdings (CSE: VREO) (OTC: VREOF).
For the first time, MSOs are the largest sub-sector in the index, representing 38% of the index and reflecting increased investor attention. We have published a more comprehensive review of the changes and the dynamics of the market at 420 Investor.
We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:
- Canadian Cannabis Producers Continued to Retreat in September with 15% Decline
- American Cannabis Operator Index Advances 32% in Q3 Despite September Pullback
We will summarize the index performance again in a month. You can learn more about the index members and the qualifications for inclusion by visiting the Global Cannabis Stock Index. A more complete analysis of the index is available at 420Investor.com. Be sure to bookmark the page to stay current on cannabis stock price movements within the day or from day-to-day.
New Cannabis Ventures maintains six proprietary indices designed to help investors monitor the publicly-traded cannabis stocks, including the Global Cannabis Stock Index as well as the Canadian Cannabis LP Index and its three sub-indices. The sixth index, the American Cannabis Operator Index, was launched at the end of October 2018 and tracks the leading cultivators, processors and retailers of cannabis in the United States.