Cannabis Stocks Follow Broader Market Selloff As Q4 Index Falls 33%
New York City – February 5, 2018 /AxisWire/ The Green Market Report (GMR), the cannabis industry’s most trusted source for credible in-depth financial and economic reporting, today released its 2018 Cannabis Company Index Q4 Summary Report. The report can be downloaded at GreenMarketReport.com/Reports.
The GMR Index follows the trading activity of 30 selected public cannabis companies that denote market dominance. After rising 56% in the third quarter, on a plethora of good news, the Index plunged 33% along with the broader market in general which saw stocks give back most of the year’s gains. The S&P 500 fell 13.9%, while the Horizons Marijuana Life Sciences ETF (HMMJ) declined by 39% in the fourth quarter. The GMR Index managed to gain 5.5% for the entire year, while the HMMJ actually dropped 19% for the year .
In Q2, investors felt that the risk to investing in cannabis had been tempered once it was clear that the DOJ was more talk than action when it came to punishing those in the cannabis industry. In addition, conservative Republicans at both the federal and state level began to demonstrate a willingness to shift away from their hardline anti-cannabis stances of the past and confirmed a willingness to discuss a pathway towards legalization.
History continued to be made in the cannabis industry during the last quarter. On October 17, Canada began the first day for sales of adult use cannabis in Canada – making 1017 the new 420. The mid-term elections in the U.S. were the next big event for the quarter. More states legalized cannabis in this year’s midterm elections in November, with Michigan becoming the latest one to legalize adult-use cannabis. Missouri and Utah both approved medical cannabis. If that wasn’t enough for the industry to cheer about, in December lawmakers in D.C. passed the 2018 Farm Bill, which included an amendment legalizing hemp.
“The fourth quarter of 2018 was very challenging for cannabis industry stocks as share prices plunged as stocks in general entered bear market territory. Legalization of hemp in December set the stage for a recovery as cannabis stocks have mostly moved higher in the early days of 2019 ,” stated Debra Borchardt, CEO of Green Market Report.
The best performing stock in the GMR Index was Charlotte’s Web Holdings which managed to end the quarter neither gaining or losing. Remaining flat was a huge accomplishment. The company stands to benefit greatly from the legalization of hemp and hemp-derived CBD products.
The biggest loser in the GMR Index was The Green Organic Dutchman with a loss of 64% in its share price. TGOD is behind many of its peers with regards to having product available for the newly legal adult market Canada.
Consolidation continues to force the Index to make adjustments, but the choice of stellar companies as replacements make the changes very easy. MPX Bioceuticals and Emblem Corp. were both removed due to impending acquisitions.
The Index decided to add Acreage Holdings Inc. as that company continues to add to its portfolio and now has a presence in 19 states. iAnthus is acquiring MPX Bioceutical and is also getting added to the Index. While the Index was sad to let MPX go, the substitution is just as strong. Cresco Labs is added as this multi-state operator focuses on markets with high barriers of entry. Finally, Florida-based Trulieve was added as the company continues to report increasing revenues and has embarked on an expansion strategy outside of the state.
“Looking ahead to 2019, we expect to see the industry adjust to the legalization of hemp and what that means for hemp-derived CBD products,” added Borchardt. “We expect the industry will experience more consolidation and even more cannabis companies to become publicly traded stocks.”
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KCSA Strategic Communications