Cannabis Central: Non-Penny Pot Stock Index Remained Flat Last Week

Below is the performance of each of the 25 equally-weighted pure-play cannabis stocks that trade for a minimum of US$1/share (i.e. the Non-penny Pot Stock Index) within each of the 3 categories that represent their primary area of focus in the cannabis industry.

The NPSI went DOWN 0.2% during the week-ending July 3rd with just 4 of the 25 constituents going UP 5% or more and only 2 going DOWN by +5% or more. In addition, 2 of the 3 categories advanced marginally. The details are as follows:

1. The Vertically Integrated "Seed-to-Sale" Category consists of 22 companies that grow, process, and sell cannabis and hemp flower and related products.

• 8 companies are Canadian Licensed Producers (LPs) and they declined 0.3%, on average, with only Aphria (APHA) going UP by 5% or more (+5.7%) and only Tilray (TLRY) going DOWN  5% or more (-12.5%).
  • The 8 constituents include: ACB; APHA; CGC; CRON; OGI; ROMJF;   TLRY and VFF
• 11 companies are American Multi-State Operators (MSOs) growing and marketing THC and/or CBD from cannabis and they advanced  1.9%, on average, with only Medicine Man (SHWZ) undergoing a price change of 5% or more (+27.9%).
  • The 11 constituents include: ACRGF; AYRSF; CCHWF; CRLBF;   CURLF; GTBIF; JUSHF; PLNHF; SHWZ; TRSSF and TCNNF
• 3 companies are MSOs that exclusively grow and sell CBD from hemp and they advanced 5.0% on average, with Avicanna (AVCNF) going UP 9.0% and cbdMD (YCBD) going UP 11.4%. 
  • The 3 constituents include: AVCNF; CWBHF and YCBD

2. The Extraction Category consists of companies focused on the extraction of cannabis compounds and their infusion into consumer products. 

• The 2 companies in this category declined 1.5%, on average, with neither having price changes of 5% or more.
  • The constituents consist of NEPT and VLNCF 

3. The Consumption Devices Category consists of companies focused on developing and selling personal consumption devices for cannabis consumers such as vape pens and inhalers.

• Only 1 company is in this category, namely Greenlane (GNLN), and it declined 15.7%.

As mentioned in previous articles the Non-penny Pot Stock Index includes:

• 4 constituents that trade between US$10 and US$20/share, namely:
  • Canopy, Aurora, Green Thumb and Trulieve 
• 4 that trade between US$5 and US$10/share, namely:
  • Tilray, Curaleaf, AYR, Cronos
• 17 that trade between US$1 and US$5/share. 
  • The official definition of a "penny" stock is one that trades below US$5/share but, when it comes to pot stocks, that is where 90% of the total universe trades, so the more literal definition of stocks that trade for less than US$1/share is used

with market capitalization consisting of:

• Mid-Cap (US$2B to US$10B): 2
  • Canopy and Cronos
• Small-Cap (US$300M to US$2B): 9
  • Aurora, Organigram, Tilray, Aphria, Cresco, Curaleaf, Green Thumb, Trulieve and Charlotte's Web
• Micro-Cap (US$50M to US$300M): 14

For the record, to more accurately reflect the true health of the cannabis sector, the NPSI excludes the following non-penny stocks that industry commentators refer to as cannabis companies (marijuana-related or ancillary) but are not directly related to the industry:

• 5 bio-pharmaceutical companies that are only doing research into the development of pharmaceuticals containing either CBD and/or THC but had not, as yet, introduced any such products into the marketplace, namely: CARA, CRBP, HUGE, XPHYF and ZYNE),
• 1 major bio-pharmaceutical company that markets just one cannabis-based product, namely, GWPH,
• 1 garden center/horticulture equipment supply company, namely, GRWG,
• 1 retail liquor chain that also sells recreational marijuana products, namely, LQSIF)
• 1 technology company that provides a central data management system for tracking regulated cannabis products, namely, KERN
• 1 consumer product research & development company, namely, NBEV and
• 1 real estate investment trust (IIPR).  

The index will be re-balanced on a quarterly basis (i.e. at the end of September) to add any new pot stocks that have consistently traded for US$1/share or more (7 are currently trading between in the US$0.70 to US$0.93 range) in the interim so any major move upwards in the sector between now and then could see them added at that time. Conversely, there are a couple of stocks currently trading slightly above US$1/share, albeit consistently, that might be dropped from the index if their stock prices falter.