After a sharp decline in September that left the index down 7% in Q3, the Global Cannabis Stock Index held on to massive gains in October and November, decreasing 0.8% to 44.39 in December:
The index, which had 32 qualifying members during the month following the quarterly rebalancing at the end of September, declined 34.1% in 2019 to 42.20 and rallied for the first time in three years, increasing 5.2% in 2020 and 61.7% in Q4:
After posting an all-time closing low of 16.95 set on March 18th, the index has rallied sharply to end the month 161.9% higher but still down over 75% from its early 2018 closing high at 180.02:
The strongest 4 names in December all gained at least 19%:
- Liberty Health Sciences (CSE: LHS) (OTC: LHSIF): +111.3%
- Jushi Holdings (CSE: JUSH) (OTC: JUSHF): +53.8%
- Columbia Care (CSE: CCHW) (NEO: CCHW) (OTC: CCHWF): +39.6%
- Innovative Industrial Properties (NYSE: IIPR): +19.2%
Three of the four best stocks in the month were cannabis operators, with REIT Innovative Industrial Properties joining the leaders as well. Liberty agreed to be acquired by Ayr Strategies (CSE: AYR.A) (OTC: AYRWF). It had been down 20% in 2020 heading into December. Jushi Holdings soared to an all-time high during the month as it opened its third Illinois retail store, acquired the balance of the ownership of its Virginia subsidiary and received $32 million in proceeds from the exercise of warrants. The stock, up 140%, was the second best performer in Q4. Columbia Care closed an acquisition in California and then announced the pending acquisition of Green Leaf Medical during the month. Innovative Industrial hit an all-time high during the month as well.
The 4 weakest names fell or rose by less than 17% in December:
- Charlotte’s Web (TSX: CWEB) (OTC: CWBHF): -37.0%
- India Globalization Capital (NYSE American: IGC): -31.9%
- Aurora Cannabis (TSX: ACB) (NYSE: ACB): -28.6%
- Cronos Group (TSX: CRON) (NASDAQ: CRON): -21.6%
Two of the worst performers, India Globalization Capital and Aurora Cannabis, had doubled in November and gave up some of those gains during the month. Aurora Cannabis rose 79% during Q4 despite the weak December. Charlotte’s Web pulled back with other CBD stocks, though it rallied 39% in Q4. Cronos Group, also strong in November, gave up some of those gains, consistent with the action of the large Canadian LPs. It ended the quarter up 39%.
We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:
- Canadian Cannabis Producer Stocks Pull Back 5% in December
- American Cannabis Operators Index Surges 46% in 2020
For Q1, the index will have 38 members following the rebalancing and the implementation of new rules for qualification. The minimum price will increase from $0.25 to $1.00, and the minimum average daily trading volume (across all markets) will rise from $500K to $1 million. Consequently, Liberty Health Sciences and MediPharm Labs, which closed below $1.00, and Power REIT, which didn’t have sufficient trading volume, have been removed. Additions include 22nd Century Group (OTC: XXII), Acreage Holdings (CSE: ACRG.A) (OTC: ACRHF), Akerna (NASDAQ: KERN), Clever Leaves (NASDAQ: CLVR), Greenlane Holdings (NASDAQ: GNLN), Hydrofarm (NASDAQ: HYFM), Pharmacielo (TSXV: PCLO) (OTC: PCLOF), SOL Global (CSE: SOL) (OTC: SOLCF) and Turning Point Brands (NYSE: TPB).
American MSOs are the largest sub-sector, representing 34% of the index. Canadian LPs will represent 26%, while ancillary companies have increased from the prior quarter to 18%. CBD companies will represent 11%, while international cannabis companies and biotech will each represent 5%. We have published a more comprehensive review of the changes and the dynamics of the market at 420 Investor.
We will summarize the index performance again in a month. You can learn more about the index members and the qualifications for inclusion by visiting the Global Cannabis Stock Index. A more complete analysis of the index is available at 420Investor.com. Be sure to bookmark the page to stay current on cannabis stock price movements within the day or from day-to-day.
New Cannabis Ventures maintains six 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 and its three sub-indices. The sixth 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.
