Last week, ending on September 20, the overall cannabis sector remained subdued. Sector ETFs, such as the Horizons Marijuana Life Sciences ETF (HMMJ), closed about 8.15% lower. Also, the ETFMJ Alternative Harvest ETF (MJ) dropped by nearly 8.1%. Both the HMMJ and MJ ETF include cannabis stocks that are more established in the cannabis sector. However, the emerging cannabis stocks had a poor run last week. This was evident in the Emerging Marijuana Growers Index ETF (HMJR), which lost about 6.6%.
What moved the market?
The broader US market represented by the S&P 500 Index (SPY) reflected negative sentiment. The S&P 500 index ended slightly lower by 0.51%. The ongoing trade war between the US and China continued to weigh down the broader market last week. In contrast, the Canadian market represented by the TSX 300 Index moved in the opposite direction with a gain of 1.3%. The TSX 300 Index gained due to a rally in global oil prices last week.
CannTrust and KushCo. were the biggest cannabis stock losers
From the 14 cannabis stocks in the above chart, CannTrust (CTST) was the biggest loser. It lost nearly 19.6%, which was due to an ongoing compliance-related scandal. CannTrust reported that Health Canada suspended its license to cultivate and harvest new lots. As a result, the company would not be able to participate in the new growth opportunities in the Canadian and global cannabis markets.
KushCo. Holdings (KSHB) was another stock that took a deep dive last week, losing nearly 15.3%. KushCo. earned about 53% of its 2018 revenue from vape products alone. The ongoing vaping concerns and related deaths could be one possible reason for KushCo.’s fall last week.
Green Thumb gained 7.5%, Aurora lost 15%
In contrast to these stocks, Green Thumb Industries (GTBIF) gained 7.5% for the week ending on September 20. While the US regulators deal with the vape-related concerns, Green Thumb continued with expansion plans.
Last week, the company announced that it will open its seventh Rise retail location in Pennsylvania. Innovative Industrial Properties (IIPR) was another stock that ended in green with a gain of 4.3%. Innovative Industrial Properties also announced its expansion efforts last week, which could explain the gain in its stock price.
Major cannabis company Aurora Cannabis (ACB), which was gearing up for cannabis 2.0, lost 15% last week. Read Cannabis 2.0: Aurora Cannabis Gears Up for Edibles Market. Canopy Growth (WEED)(CGC) was down by nearly 7.8%. Read our full coverage on Canopy Growth stock this week at Canopy Growth Stock Rises, Oppenheimer Initiates Coverage.
The broader cannabis sector
The broader cannabis sector around the world continued to move in a positive direction. Mexico got started with a discussion on legalizing cannabis at a federal level. Also, the US had its yin and yang moment when it came to legalizing cannabis. On one hand, Beto O’ Rourke gave more insights last week into his plans to legalize marijuana if he was elected the US president.
In addition, the US Senate Majority Leader Mitch McConnell wants the FDA to ease its regulations on CBD products. On the other hand, cannabis samples in Nevada failed tests. In another case, legislators in New Jersey did not move ahead with legislation to expunge cannabis-related convictions last week.
For weekend reading
There were a lot of discussions last week on the US Banking Bill for marijuana businesses. This is one of the most important pieces of legislation for cannabis companies if they want to capture the hemp and CBD markets. For your weekend reading, we have discussed the bill in detail in our series titled Cannabis: House to Vote on US Banking Bill.