This Sub-Sector Index Rallied Despite June Cannabis Stock Decline

As we described in a previous article, the Global Cannabis Stock Index fell again in June, the fifth consecutive monthly decline after a rally to begin the year. That index is now down  down 22.8% year-to-date, which has followed a record decline of 70.4% for 2022.

In this 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. Two of the three fell, while one rallied during the month.

American Cannabis Stocks Index

The American Cannabis Operator Index fell less than the overall sector. In April, the index plunged fell just 0.2%, and it dropped  2.2% in May. In June, the decline was worse, with the index falling 4.6% to 12.12:

Down 8.6% in Q1, the index fell 6.9% in Q2. It is down now 15.0% in 2023, less than the Global Cannabis Stock Index. Over the past year, the index has declined 41.9%:

The index, which launched in October 2018, finally took out the low from March 2020 in late 2022 and extended the decline in April. In May, it held that all-time low, and it held as well in June:

During June, 4 MSOs suffered double-digit declines. Leading the way lower was Ascend Wellness (OTC: AAWH) (CSE: AAWH), which fell 22.5%. Ayr Wellness (OTC: AYRWF) (CSE: AYR.A) dropped 15.4%. Cresco Labs (OTC: CRLBF) (CSE: CL) declined 11.5%, and Glass House Brands (OTC: GLASF) (NEO: GLAS.A.U) pulled back 10.1%. There were no double-digit gainers.

In July, the index will decrease from 12 to 9 members with the deletion of the three that were added in June, Ascend Wellness, Ayr Wellness  and MariMed (OTC: MRMD) (CSE: MRMD), all of fell below the minimum for daily value traded.

Ancillary Cannabis Index

The Ancillary Cannabis Index rallied and broke the downward trend in cannabis stocks, increasing 4.9% to 13.81:

The index, with a massive loss of 76.6% in 2022 to 15.02, has declined 46.6% over the past year. It is down 8.1% in 2023,which is less than the Global Cannabis Stock Index:

The index is down over 86% since launching at the end of March in 2021:

The best performing stock in the index in June was Turning Point Brands (NYSE: TPB), which rose 14.7%. It was the worst stock in May. The worst stock was GrowGeneration (NASDAQ: GRWG), which lost 8.1%. It was the best in May. Five of the seven stocks posted gains during the month.

In July, the index will increase to 8 members with the return of WM Technology (NASDAQ: MAPS).

Canadian Cannabis LP Index

The Canadian Cannabis LP Index was very strong to begin the year, rising 19.4% in January and falling just slightly in February, but the index plunged 15.4% in March. In April, it rose 2.9%, but it was very weak in May, falling 7.4%. June was a very weak month, with the index dropping 13.0% to a new all-time closing low of 60.20:

The index, up 0.1% in Q1 after falling 11.4% in Q4 , declined the most of the three sub-sectors in Q2, dropping 17.1%. It fell 62.8% in 2022 to 72.59. It is down 17.1% so far in 2023. Over the last year, it has dropped by 36.9%.

The index, which had made a new all-time low in December, set another one this week. It is down a lot from its peak:

The Canadian LPs trade mainly below C$1, with just three stocks having a higher price. Half of the 20 stocks in the index trade below C$0.25. During June, Canopy Growth (TSX: WEED) (NASDAQ: CGC) was the worst stock of those trading above C$0.25, falling 49.7%. It purchased during the month a large amount of Indiva (TSXV: NDVA) (OTC: NDVAF), which was the worst stock overall, falling 60% during June. Rubicon Organics (TSXV: ROMJ) (OTC: ROMJF) was the best stock overall, rising 36.8%. It is down 32.5% year-to-date. The best higher-priced stock during the month was Cronos Group (TSX: CRON) (NASDAQ: CRON), which rose 8.7%. We called out Cronos Group and a couple of other LPs in a recent newsletter as smarter ways to invest in Canadian LPs than Canopy Growth and Tilray (TSX: TLRY) (NASDAQ: TLRY).

In July, the index will drop from 21 members at the end of June to 20 members with the removal of HEXO Corp. in late June after its acquisition by Tilray.

New Cannabis Ventures maintains four 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. The third 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.

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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