Cannabis/Cannabis-Related Stocks -3.8%, On Average, In May; Still +31.3% YTD

At we track the performance of four (4) cannabis/cannabis-related pot stock categories. Below is a comparison of how each sub-category performed in May and YTD, and in total.

  1. The Cannabis-Centric BioPharma Stock Index of 7 constituents tracks the stock performance of those clinical-stage biopharmaceutical companies involved in the exclusive development of drugs using CBD and THC and have a Market Capitalization of US$50M or more.
    • It was +15.3% in May and is +13.9% YTD with an average Beta of 2.9 and an average Market Capitalization of US$109M.
    • Its constituents are: Corbus (CRBP), Zynerba (ZYNE), MGC (MGCLF), Revive (RVVTF), Zelira (ZLDAF), Tetra Bio (TBPMF) and Enveric (ENVB).
      • Zynerba, focused on pharmaceutically-produced transdermal cannabinoid therapies for severe, chronic health conditions including Fragile X syndrome, autism spectrum disorder, 22q11.2 deletion syndrome, and a heterogeneous group of rare and ultra-rare epilepsies known as developmental and epileptic encephalopathies. advanced by 28.8% in May reporting improved Q1 2021 financial results. The stock is +72.1% YTD. 
      • MGC Pharmaceuticals, a European based bio-pharma company specializing in the production and development of phytocannabinoid-derived medicines, declined by 20.0% in May based on the company's lack of news. 
  2. The Ancillary Pot Stock Index of 8 constituents tracks the performance of companies that provide goods and services to cannabis operators and have a Market Capitalization of at least US$100M.
    • It was +4.5% in May and is +35.2% YTD with an average Beta of 2.2 and an average Market Capitalization of US$3.2B.
    • Its constituents are: Scotts Miracle-Gro (SMG), Innovative REIT (IIPR), GrowGeneration (GRWG), Hydrofarm (HYFM), Turning Point (TPB), Village Farms (VFF), Forian (FORA) and AFC Gamma (AFCG).
      • GrowGeneration announced that it had purchased The Harvest Company, a small privately held peer based in Northern California's Emerald Triangle, the largest cannabis-producing region in the country, for an undisclosed price in May. The stock was +1.9% in May and is +10.4% YTD and reported a positive EBITDA and gross profit in its Q1 2021 financial report.
      • Village Farms International shares were -12.7% in May as a result of its Q1 2021 financial report missing EPS and EBITDA estimates and it is now -3.8% YTD.
  3.  The Canadian Pure-Play Licensed Producers Pot Stock Index of 6 constituents tracks the performance of those Canadian producers that derive 100% of their revenue from the marijuana sector, trade for at least US$1/share and have a Market Capitalization of at least US$100M.
    • It was +0.1% in May and is +35.1% YTD with an average Beta of 2.11 and an average Market Capitalization of US$3.6B.
    • Its constituents are: Canopy (CGC), Tilray (TLRY), Cronos (CRON), Aurora (ACB), OrganiGram (OGI) and Hexo (HEXO).
      • OrganiGram Holdings was +20.7% in May even with not-so-good Q1 2021 earnings, based on the progress of the company’s operation. The company appointed a new Vice President of Innovation and launched a lineup of dried flower products (Big Bag of Buds) featuring a roster of well-known genetics as well as a rotation of one-time offerings in a 28g format. The company's stock is now +141.4% YTD.
      • Tilray shares shot up 253.1% in February with the announcement of its merger with Aphria but the market has reassessed the situation since then and the stock is -31.6% since the end of February including a -9.1% in May yet remains +101.8% YTD.
  4. The American Pure-Play Multi-State Operators Pot Stock Index of 17 constituents tracks the performance of those multi-state marijuana companies that derive 100% of their revenue from the sector, trade for at least US$1/share and have a Market Capitalization in excess of US$100M.
    • It was -3.4% in May and is +21.7% YTD with an average Beta of 2.69 and an average Market Capitalization of US$227M.
    • Its constituents are: Curaleaf (CURLF), Green Thumb (GTBIF), Trulieve (TRSSF), Verano (VRNOF), Cresco (CRLBF), TerrAscend (TRSSF), Columbia (CCHWF), Harvest Health (HRVSF), Ascend (AAHW), Planet 13 (PLNHF), Ayr (AYRWF), Jushi (JUSHF), 4 Front (FFNTF), Charlotte's Web (CWBHF), Gage (GAGE), Vireo (VREOF) and Acreage (ACRDF.ACRHF).
      • Harvest Health and Recreation was purchased by Trulieve for $2.1B in stock, a 34% premium, causing Harvest's stock to surge +42.8% in May and is now +91.7% YTD.
      • Jushi Holdings reported that its auditor required additional time to complete its audit procedures but expected to be ready to sign off on the audit by Friday, June 4, 2021, at which time the Company plans to file the Documents on SEDAR. This will also result in a delay in the Company filing its MD&A and consolidated financial statements for the first quarter ended March 31, 2021,  The Company is not aware of any material issue with the auditor’s review and expects an unqualified opinion but, that being said, its stock was -18.5% in May and is now -0.7% YTD.

The above 4 non-tradable indices replicate the performance of a portfolio investing an equal amount of money in each company in the various cannabis categories, with daily rebalancing to maintain equal weight.

The Conservative Pot Stock Index of 8 constituents tracks the performance of the major tobacco, beer/liquor, and other companies that have bought into marijuana companies and compares their performances with those of their associated marijuana companies.

  • It was +3.1% in May and is +9.7% YTD with an average dividend yield of 2.5%, an average Beta of 0.96 and an average Market Capitalization of $81.6B per constituent compared to its associated marijuana companies which were -2.9% May and are +48.2% YTD, on average, with betas of 1.91, on average, and pay out no dividends.
  • Its constituents are: Altria (MO), Imperial Brands (IMBBY), Constellation (STZ), Molson Coors (TAP), Anheuser Busch (BUD), Novartis (NVS), Couche-Tard (ANCUF) and British American (BTI). 
    • Imperial Brands was +10.4% in May based on its favorable Q2 2021 financial report and is +13.55 YTD
    • Constellation Brands was the only constituent to decline doing so by -2.5% in May for no particular reason but remains +9.8% YTD. 

Excluding the Conservative Pot Stock Index the combined Pot Stock Index tracks 38 out of a universe of more than 217 (i.e. 17.5%) cannabis companies and, on average, they were -3.8% in May but remain +31.3% YTD.

Other sites have made an effort to track the movement of the pot and pot-related stock sector but IMHO have missed the mark for a variety of reasons. One site, for example, tracks the performance of 217 stocks, even those remotely associated with (or just "wannabe") the marijuana industry, and, as such, is dominated by companies with extremely small market caps of which 76.5% (166 stocks) trade for less than US$1/share. Another site tracks 46 marijuana/cannabis-related companies worldwide that trade for a minimum of US1$/share. Neither of the aforementioned tracking indexes, however, breaks out the performance of the marijuana sector by category to provide a full understanding of how each category, and its respective constituents, are performing and trending to assist prospective investors in their investment decisions. We think our approach to tracking the trends of the marijuana sector by category provides the clearest overview of the cannabis stock sector that is available anywhere

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