You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.
It’s almost month-end, and we will publish a review of the indices during July next week. The market, as measured by the New Cannabis Ventures Global Cannabis Stock Index, is still under pressure, down 16.5% so far in 2023, but it has rallied so far during the month. The index has gained 8.1% in July, but the performance is very mixed among the 21 companies in the index. 4 stocks have gained more than 20%, while one has fallen by more than 20%. 6 names have actually declined so far.
Looking at the index, 9 of the 21 names are ancillary, and two of these are in that group of four stocks up strongly. These ancillary stocks represented 42.9% of the index at the end of June. Now, due to their performance, they are 44.8%. We maintain an Ancillary Cannabis Index which has 8 members. 7 of these are in the Global Cannabis Stock Index, while 2 in that index didn’t qualify for inclusion in the Ancillary Cannabis Index.
The Ancillary Cannabis Index, down just 0.6% in the year, has rallied 8.1% in July, in line with the Global Cannabis Stock Index. It had a very rough time in 2022, declining 76.6%, which was worse than the Global Cannabis Stock Index. The small dip in 2023 has helped its performance relative to the overall sector. Since the end of 2021, the Ancillary Cannabis Index has declined 76.8%, while the Global Cannabis Stock Index has dropped 75.3%.
We think that ancillary companies should be considered by those who want to invest in the sector. Unlike the American cannabis operators, there is no 280E tax for them. Additionally, there are no limitations by higher exchanges, which continue to refuse to list American cannabis growers, processors and sellers. Finally, there are no limitations on their operations geographically. Too many investors focus on just one sub-sector, and we believe that it makes more sense to broaden one’s approach to investing in the cannabis markets.
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Alan & Joel