For the trading week that ended January 20, my proprietary Canadian Cannabis Company Index (MCCCI) increased by 1.8 % compared to the prior week when it increased by 7.5%. The index consists of 20 stocks, many of which are among the most widely held holdings of the 3 ETFs (MJ, CNBS, and THCX) that I consider to be a reliable barometer of the Canadian cannabis sector. MCCCI's 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 sector. Now let us look at this week’s good, bad, and ugly stocks, shall we?

Image by Herbal Hemp from Pixabay

The Good

There was 1 stock that increased by more than 10%, which is my metric for inclusion in this category: NXTTF +12.2%.

On 1/19/23, Lifeist Wellness Inc. announced plans to introduce several higher margin multi-pack offerings in Ontario through the Ontario Cannabis Store (the “OCS”) that are believed to be first-to-market in the province. In my view, this development has the potential to be bullish for the company going forward.

The Bad

There were no stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category.

The Ugly

There were no stocks that decreased by 20% or more, which is my metric for inclusion in this category.

Valuation Metric Review

There was a decrease of 2.4% in the “Big Four” (all of which decreased marginally) compared to the prior week when there was an increase of 6.8%. This cohort, which represents a significant percentage of the MCCCI, continues to perform in lock step.

Recap

6 of the 20 stocks in the MCCCI increased. There was an increase of 3.2% in the relative strength index compared to the prior week when there was an increase of 23.7%. On 1/17/23 SNDL Inc. announced the completion of the previously disclosed acquisition of all of the issued and outstanding common shares of The Valens Company Inc. (VLNS) which means this stock has been removed from the MCCCI. Given the present oversupply in the Canadian cannabis sector, I fully expect additional consolidation with the next 9 months or less. Let us see how this volatile sector has performed at the same time next week, shall we?

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