Global Cannabis Stocks Extend Rally in September

Cannabis stocks, as measured by the Global Cannabis Stock Index, added to their August gains in September, rising 2.4% to 114.83:

The index, which had 53 qualifying members that were equally weighted at the time of the prior rebalancing in June, had 51 members in September after the removal of MedReleaf in late July and the removal of Hiku Brands in late August due their acquisitions, has declined 19.2% in 2018 despite the strength in Canadian licensed producers but is still up 102% from late October 2017, when the market ended a correction:

While the overall index didn’t change substantially during the month, seven names advanced more than 20%, with eighteen gaining more than 10%:

Scythian Biosciences (CSE: SCYB) (OTC: SCCYF) closed on the divestiture of its Latin American and Caribbean assets to Aphria (TSX: APH) (OTC: APHQF). Aphria divested its investment in Liberty Health Sciences (CSE: LHS) (OTC: LHSIF) but retained a five-year option to repurchase the stake, which the buyers can’t sell. Aurora Cannabis (TSX: ACB) (OTC: ACBFF) revealed that it is in discussions with Coca Cola (NYSE: KO) and also indicated that it will be listing on a major U.S. exchange in October. Namaste Technologies (TSXV: N) (OTC: NXTTF) received an amendment to its Health Canada license allowing it to commence sales of medical cannabis. GW Pharma (NASDAQ: GWPH) had its recently approved Epidiolex receive Schedule V classification from the DEA, allowing it to begin to sell the pharmaceutical.

Despite favorable market conditions, eight stocks declined more than 10%:

With the exception of Sunniva (CSE: SNN) (OTC: SNNVF), which raised capital during the month, the laggards are all what we consider to be lower quality companies.

In late September, we conducted the quarterly rebalancing, raising the bar a bit for qualification, including a hike in the minimum price of $0.10 to $0.25 and a minimum average daily trading value in excess of $600,00, up from $400,000. We also imposed a new constraint, with companies included in the index required to have at least $100,000 in average daily trading value in the U.S. ticker. The index will now include 61 companies, with 9 deletions and 19 new names.

Following the changes,  companies with Canadian primary listings or that operate in Canada represent 74% of the index, including 36% that are licensed producers in Canada. One Australian company represents 1.6%. Readers may be interested in a more detailed discussion of the index and its changes that is available to subscribers at 420 Investor.

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. Be sure to bookmark the page to stay current on cannabis 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

Get Our Sunday Newsletter