NCV Indices Demonstrate That the Weakness in Cannabis Stocks Is Broad

As we described in an earlier article, the Global Cannabis Stock Index closed in June at its worst level ever, falling 23.1% and moving to a drop of more than 55% in 2022. In this exclusive article we will summarize the performance of the other managed indices that New Cannabis Ventures offers to its readers. We will discuss the performance of the American Cannabis Operator Index, Ancillary Cannabis Index and Canadian Cannabis LP Index as well as Canadian Cannabis LP index Tier 1, 2 and 3.


American Cannabis Stocks Index

The American Cannabis Operator Index fell 25.1% in June to 20.85. Its mainly MSO base is very beaten up, falling more than the broad market.

For 2022, the index is now down 50.0%, which is less than the broad market:

While the Global Cannabis Stock Index took out the prior lows from March 2020, this one has held those levels:

During June, the strongest performer was Charlotte’s Web (TSX: CWEB) (OTC: CWBHF) at -3.7%, while the weakest names was TerrAscend (CSE:TER) (OTC:TRSSF) at -43.0%. For July, the number of members of the index has declined substantially due mainly to low trading volumes in June. The index now has 13 names, down 8 from last month.


Ancillary Cannabis Index

The Ancillary Cannabis Index was hammered in June, declining 28.3% to 25.88:

The year-to-date performance has been very weak, with the index down more than the overall market, falling 59.7%:

 

The index is down more than 79% since launching 15 months ago:

The index included 14 names, but 4 didn’t qualify for continued inclusion: Agrify (NASDAQ: AGFY), Akerna (NASDAQ: KERN), Power REIT (NYSE American: PW) and urban-gro (NASDAQ: UGRO). All of these stocks had insufficient trading volume during June. During the month, Akerna (NASDAQ: KERN), which did a desperate financing round, fell the worst at -65.5%. The winner in this group was CEA Industries (NASDAQ: CEAD), which scored a 1.6% gain.


The final part of the market for which we have a series of indices is the Canadian LP space. The Canadian Cannabis LP Index fell for the twelfth consecutive month, declining 19.5% to 95.40 in June.

The index has declined 51.1% in 2022 from its year-end 2021 close of 194.95.

The index remains above its early-day lows, but it is down a lot from the peak:

Many LPs don’t qualify to be in the index. At the end of the month, we removed Neptune Well Solutions (TSX: NEPT) (NASDAQ: NEPT) due to its plans to stop serving the cannabis market in Canada. We added back Canadabis Capital (TSXV: CANB) due to its sales lifting above C$2.5 million. It will be part of Tier 3.

Canadian Cannabis LP Tier 1 Index

Tier 1 index fell 24.8% to 117.01 in June. Tier 1, which is now down 62.8% in 2022, dropped 17.7% in 2021 when it ended at 314.28. Among Tier 1 companies, Canopy Growth (TSX: WEED) (NASDAQ: CGC) saw the largest decline, tumbling 42.2%. The company finally addressed its convertible note debt due in about a year.

Canadian Cannabis LP Tier 2 Index

Tier 2 index fell 15.0% to 140.58 in June. In 2021, it lost 17.1%, closing at 267.36, and it is now down 47.4% in 2022. Among tier 2 companies, Indiva (TSXV: NDVA) (OTC: NDVAF) was the worst performer, falling 31.8%.

Canadian Cannabis LP Tier 3 Index

Tier 3 index fell 10.3% to 24.45 in June. It ended at 47.42 in 2021, declining 19.9%, and is now down 48.4% in 2022.


New Cannabis Ventures maintains seven 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. Afterwards, we introduced the Ancillary Cannabis Index at the end of March 2021, reflecting the increasing number of publicly-traded companies providing goods or services to cannabis operators.

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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

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