MACRO

For the trading week ended 4/10/20 my Canadian Cannabis Company Index (MCCCI) increased by a modest   5.9%. reversing the bearish trend of 2020. This index consists of 25 stocks, many of which are among the most widely-held holdings of the 3 ETFs (MJ, CNBS and THCX ) the that I consider to be a reliable barometer of the status of the industry as a whole. The MCCIs differentiated business model is both weighted and market capitalization based because I believe that this approach best represents the current landscape of the Canadian cannabis industry. In my view, there will be widespread carnage in this sector for the foreseeable future, including but not limited to business failures, consolidation, and a pronounced downtrend in valuation. Let’s look at this week’s good, bad and ugly stocks.

MICRO

THE GOOD

Rubicon Organics Inc.  (OTCQX-ROMJF) gained 18.1 % to close the week at  $1.37  The company’s anemic market cap of ~ $55.3M ranks it in the bottom  1/3  of the MCCCI which mutes its positive performance

THE BAD AND THE UGLY

HEXO Corp, which trades on both the NYSE and TSE, decreased  24% and closed the week at $0.52.  As I said  last week HEXO was the subject of a “code blue alert” article I published on 1/8/20  at  Seeking Alpha, which is a partner of TalkMarkets  The stock is now down more than  63% since the publication of my article, and  I believe that the probability of the stock being  delisted by the NYSE  within  3-6 months is  more than  75%.

RECAP

It was a rather uneventful week for the Canadian cannabis companies. The relative strength indicator increase of  6.2 % was  nominally more than the overall index  increase of 5.9% Now that Q2 is  underway, let’s see  how this volatile sector has performed   same time next week shall we?