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At the end of August, the U.S. Department of Health & Human Services recommended that marijuana's drug status be changed to a lower-risk Schedule III substance which would allow major U.S. stock exchanges to list MSOs on their exchanges, substantially ease banking requirements for MSO companies and allow Canadian cannabis LPs to sell their products in the United States which met with an enthusiastic response from investors. Unfortunately, however, that enthusiasm has turned to pessimism with the 5 largest constituents in munKNEE's Canadian Cannabis LPs Index and the 7 stocks in munKNEE's American Cannabis MSOs Index together actually declining 5.3%, on average, since the end of August and are now trading for LESS, on average, than when all this misplaced hope began.

Below are the performances of the constituents in each index for this week to date, in descending order and month-to-date (MTD) with their current prices relative to their projected 12-month sales *(PSR), and in the case of the MSO constituents their enterprise value relative to their earnings before interest, taxes, depreciation and amortization **(EV/EBITDA): 
 

Canadian Cannabis LPs Index

1. Organigram Holdings (OGI): DOWN 0.9% this week; DOWN 15.2% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 0.8 (excellent)
2. Tilray Brands (TLRY): DOWN 5.0% this week; DOWN 20.1% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 1.8 (excellent)
3. Cronos Group (CRON): DOWN 6.9% this week; DOWN 12.5% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 8.4 ( much above the sector mean of 3.45)
4. Aurora Cannabis (ACB): DOWN 9.8% this week; DOWN 22.0% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 1.1 (excellent)
5. Canopy Growth (CGC): DOWN 21.7% this week; DOWN 30.8% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 1.5 (excellent)

Index Average: DOWN 7.1% this week; DOWN 4.7% last week; DOWN 18.4% since the end of September.
 

American Cannabis MSOs Index

1. Verano Holdings (VRNOF): UP 6.3% this week; DOWN 0.4% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 1.6 (very good)
   • Forward EV/EBITDA Ratio: 6.6
2. Trulieve Cannabis (TCNNF): UP 1.0% this week; DOWN 16.6% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 0.8 (excellent)
   • Forward EV/EBITDA Ratio: 5.7
3. Cresco Labs (CRLBF): UP 0.6% this week; DOWN 20.2% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 0.8 (excellent)
   • Forward EV/EBITDA Ratio: 7.4
4. TerrAscend Corp. (TSNDF): DOWN 1.1% this week; DOWN 8.3% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 1.7 (very good)
   • Forward EV/EBITDA Ratio: 11.7
5. The Cannabist Company (CBSTF): DOWN 2.6% this week; DOWN 15.6% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 0.6 (excellent)
   • Forward EV/EBITDA Ratio: 10.2
6. Green Thumb (GTBIF): DOWN 3.1% this week; DOWN 16.4% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 2.1 (good)
   • Forward EV/EBITDA Ratio: 8.4
7. Curaleaf Holdings (CURLF): DOWN 8.2% this week; DOWN 18.6% since the end of September
   • Forward Price-to-Sales Ratio (PSR): 2.2 (good)
   • Forward EV/EBITDA Ratio: 12.5 (above the sector mean of 12.2)

Index Average: DOWN 1.4% this week; DOWN 2.2% last week; DOWN 14.0% since the end of September

*The price-to-sales ratio (PSR) describes how much someone must pay to buy one share of a company relative to how much that share generates in revenue for the company. and, as such, determines whether its stock is cheap or overpriced in comparison to its peers. The mean forward sector ratio is 3.45 but is considered excellent when the value falls below two (2).

**The Enterprise Value-to-Earnings Before Interest, Taxes, Depreciation, and Amortization ratio (EV/EBITDA) is one of the best metrics used by value investors to evaluate a company because it accounts for the value of all financing the company has received from both equity stakes and debt allowing investors to compare profitability between companies. A high means the company is overvalued, while a low ratio indicates it’s undervalued. The mean forward EV/EBITDA ratio for cannabis companies is 12.2.

If you are interested in the cannabis category, consider:

• the AdvisorShares Pure US Cannabis ETF (MSOS) which is DOWN 3.0% this week and DOWN 14.0% MTD and/or
• the Global X Cannabis ETF (POTX), which consists of the above 5 highlighted Canadian stocks plus another 12 cannabis or cannabis-related (i.e. auxiliary) stocks, is DOWN 4.1% this week and DOWN 14.6% MTD.

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