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Cannabis Sector: The Week in Review for October 3


Oct. 5 2019, Updated 12:35 a.m. ET

The cannabis sector was trading in the red for the week ended October 3. The sector’s ETFs broadly ended the week in negative territory. The Cambria Cannabis ETF (TOKE) lost nearly 2.5%, and the Horizons Marijuana Life Sciences ETF (HMMJ) declined by 2.0%.

The Emerging Marijuana Growers Index ETF (HMJR), which includes emerging cannabis stocks, lost about 6%. The price movement of the cannabis sector ETFs reflected the negative investor sentiment toward the industry this week. The cannabis sector has had a tough time this year, driven by many factors. Will the tough times end soon?

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What moved the market?

The US and the Canadian markets were both in the red last week. The S&P 500 Index (SPY), which represents the broader US stock market, closed nearly 2% lower. This performance was driven by ISM’s PMI (purchasing manager’s index) data. Additionally, ADP-Moody’s also showed a slowdown in job creation in the US.

The Dow Jones Index was down 2.3% last week, also led by PMI data. The PMI declined for the second consecutive month in September, indicating a contraction in the US economy.

The negative momentum in the US seems to have weighed down the Canadian market last week. The TSX 300 Index declined almost 2.0% for the week ended October 3. Furthermore, the European indexes also traded in the red on Brexit worries and manufacturing data.

Biggest cannabis movers

The chart above shows the performance of 14 cannabis stocks and six marijuana ETFs last week. Emerald Health (EMH) was among the biggest underperformers with a weekly decline of 11.0%.

Supreme Cannabis (FIRE) also lost close to 9% last week. The stock continues to decline after it reported its fourth-quarter earnings on September 17, even though the results were good. To learn about analysts’ view on the stock, read Supreme Cannabis: Analysts’ Target Price and Ratings.

Things are still gloomy for CannTrust, as the stock is still losing value. CannTrust lost 7.5% last week. Please read CannTrust Stock Hits an All-Time Low: What’s Next?

Green Thumb Industries (GTBIF) and KushCo Holdings (KSHB) were the top underperformers in the week ended September 27. However, these stocks bounced back last week.

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Green Thumb announced that its founder and CEO, Ben Kovler, would be taking part in the Canaccord Genuity US Cannabis Symposium in Toronto on October 3. The stock also got a boost this month after Cowen analysts gave an “outperform” rating and a price target of $18.50. Last week, Green Thumb gained 11.5% and KushCo increased 13.5%.

The cannabis sector around the world

While the marijuana sector stayed low last week in the US, this month’s Cannabis 2.0 legalization in Canada can lift the industry. Overall, cannabis players are preparing to expand their vaping businesses. Meanwhile, vaping concerns are engulfing the sector with each passing day. To learn more, please read Vaping: What the CDC Has Uncovered So Far.

While Canopy Growth (WEED)(CGC) is gearing up for Cannabis 2.0, it is also expanding its CBD business. It acquired sports nutrition company BioSteel to broaden its CBD product line. To learn more, please read Why Canopy Growth Acquired BioSteel Sports Nutrition. Canopy Growth stock lost 1.3% last week.

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The cannabis industry is gaining traction globally. Recently, Jamaica partnered with the Harvard International Phytomedicines and Medical Cannabis Institute to drive the country’s cannabis industry. This would include conducting additional clinical trials to understand the pros and cons of cannabis products. To learn more, read Cannabis: Why Jamaica Has Associated with Harvard.

In the US, more states are supporting marijuana legalization, including Pennsylvania, Wisconsin, and South Dakota.

For weekend reading

In the US, cannabis legalization is picking up speed in some states. However, federal legalization still looks hazy. We believe the economic benefits could drive the US to consider full-scale legalization. Read Cannabis Legalization: Is It Time for the US to Act?

Also, to learn more about analysts’ price targets and ratings for cannabis stocks, check out our Analyst Price Target page.


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