Already down sharply through February, the Global Cannabis Stock Index extended its losses with a 24.9% decline during March, ending at 23.58 despite a bounce from record lows mid-month:
The index, which had 41 qualifying members during the month following the quarterly rebalancing at the end of December, declined 34.1% in 2019 to 42.20 and is now down 44.1% in 2020:
After posting an all-time closing low of 16.95 set on March 18th, the index rallied sharply to end the month down almost 87% from its early 2018 closing high at 180.02:
The strongest 4 names in March:
- 22nd Century Group (NYSE American: XXII): +1.4%
- CannTrust (TSX: TRST) (NYSE: CTST): -0.3%
- Cronos Group (TSX: CRON) (NASDAQ: CRON): -3.1%
- Scotts Miracle-Gro (NYSE: SMG): -3.4%
22nd Century Group is exposed mainly to tobacco, but it did announce an advance of its proprietary hemp/cannabis bioinformatics platform during the month. CannTrust was halted from trading after March 30th and hasn’t traded subsequently. The company has received short-term protection from creditors and plaintiffs in class-action litigation, and it is likely to be delisted from the NYSE. Despite an SEC investigation following a restatement of its financials as well as a disappointing Q4, Cronos Group held up well, buoyed by its large cash balance. Finally, Scotts Miracle-Gro pre-announced a strong March quarter, with its cannabis-focused Hawthorne division expected to post 55% growth from a year ago.
4 names that fell by more than 50% during March:
- Green Growth Brands (CSE: GGB) (OTC: GGBXF): -60.8%
- Harvest Health and Recreation (CSE: HARV) (OTC: HRVSF): -60.4%
- Sundial Growers (NASDAQ: SNDL): -54.9%
- Tilray (NASDAQ: TLRY): -52.3%
The worst performing names were all in desperate need of capital, with some of them accessing it on onerous terms during March. Green Growth Brands announced the potential sale of its CBD business but then totally shuttered it when COVID-19 distancing measures were enacted. Its cannabis operations in Nevada have been limited to delivery-only. The company has warned its investors that it may not be able to meet its near-term financial obligations, and its CEO resigned during the month. Sundial Growers is also struggling with its debt, and the company saw a sharp contraction in Q4 revenue compared to the prior quarter as its operating loss expanded. Harvest, which mutually terminated the large pending acquisition of Verano Holdings during the month, also priced an equity offering that weighed heavily on the stock. Similarly, Tilray sold stock with warrants at an all-time low at the time, though the stock was able to recover some of its losses after the transaction.
At the end of March, we rebalanced the index, which resulted in the removals of Aleafia Health, Auxly, Green Growth Brands, Green Organic Dutchman, Greenlane, MedMen, Supreme Cannabis, TerrAscend and Vireo Health and the additions of AYR Strategies (CSE: AYR) (OTC: AYRSF), cbdMD (NYSE American: YCBD) and Power REIT (NYSE: PW). Our qualifying standards changed slightly, with the minimum daily trading value reduced from $500K last quarter to $300K this quarter due to lower trading volumes across the sector.
We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:
- Canadian Cannabis Producer Stocks Follow Broad Market 18% Lower in March
- American Cannabis Operator Index Plunges 28% in March Despite Big Bounce
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 last year and tracks the leading cultivators, processors and retailers of cannabis in the United States.