Cannabis Samples Didn’t Pass Tests in Nevada
The Nevada Department of Taxation announced that four cannabis products sold between May 28 and July 10 failed the secondary microbial test.
Sep. 21 2019, Updated 1:32 a.m. ET
On September 16, The Nevada Department of Taxation announced that four cannabis products sold between May 28 and July 10 failed the secondary microbial test. As a result, the agency issued an advisory to consumers and patients not to consume those products.
The advisory stated that the samples contained a higher quantity of total yeast and mold than the permissible level of less than 10,000 CFU (colony-forming units) per gram. The affected products were cultivated by D.H. Aldebaran and Las Vegas Natural Caregivers companies.
Nevada legalized cannabis
Nevada legalized medical and recreational marijuana. The state legalized medical cannabis in 2000. Nevada residents voted in favor of recreational cannabis and passed the Regulation and Taxation of Marijuana Act on November 8, 2016. The bill legalized cannabis for recreational use starting on January 1, 2017. Let’s look at some of the companies that operate in the state.
In March, Curaleaf (CURLF) (CURA) signed an agreement to acquire Acres Cannabis for approximately $70 million. Acres Cannabis operates a cultivation facility in Amargosa Valley and a dispensary in Las Vegas. Currently, MedMen Enterprises (MMEN) (MMNFF) operates three stores in Las Vegas—The Strip, Downtown, and Spring Valley. Planet 13 Holdings (PLTH) (PLNHF) owns a dispensary at the Las Vegas Cannabis Entertainment Complex, also known as “Super Store.”
Marijuana sector’s performance
Notably, the marijuana sector is still in the growth phase. So, any bad news could have a significant impact on cannabis companies’ stock prices. The cannabis sector has already underperformed the broader equity markets this year. The S&P 500 Index and the Dow Jones Industrial Average have risen 19.9% and 16.1% YTD (year-to-date), respectively. However, the ETFMG Alternative Harvest ETF (MJ) and the Horizons Marijuana Life Sciences Index ETF (HMMJ) have fallen 5.5% and 2.4%, respectively. Recently, cannabis companies’ stock prices fell due to regulatory scandals and increased operating losses.
Major players’ stock performance
Aurora Cannabis (ACB), Canopy Growth (WEED) (CGC), and Aphria (APHA) have returned 3.6%, -2.0%, and 2.4% YTD, respectively.
Aurora Cannabis has been facing downward pressure. On September 11, the company reported lower-than-expected fourth-quarter revenues. P1 Financials, Eight Capital, and Cowen and Company lowered their target prices after their fourth-quarter earnings. Stifel Nicolaus lowered its rating to “sell” from “hold” and cut its target price. The company has lost 19.7% since its fourth-quarter earnings.
Canopy Growth reported weak first-quarter earnings on August 14. However, the company didn’t meet analysts’ top or bottom-line estimates. As a result, the company’s stock price fell. Canopy Growth has lost 18.0% of its stock value since its first-quarter earnings.
Aphria stock has risen 16.5% since its fourth-quarter earnings on August 1. The company outperformed analysts’ top and bottom-line estimates, which drove its stock prices.
