The Canadian Licensed Producers (LP) component of the munKNEE Pure-Play Pot Stock Index decline accelerated this past week (-8.2%) after having declined 4.9% in March. 

When so many stocks in the same industry sink, there's usually are common denominator and, in this case, the culprits are:

• Vice President Kamala Harris' comments this week in an interview with the San Francisco Chronicle in which she stated that the Biden administration has been too busy with other priorities to address marijuana decriminalization or other major cannabis reforms. This relegation of cannabis-related efforts to the back burner could be increasing investors' doubts that any action will be forthcoming in the near future.
• Natalie Fertig's (with Politico) tweet that the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau has been meeting with various cannabis advocacy groups to discuss cannabis regulations. Investors could be more worried about the possibility that cannabis reform measures won't meet expectations than they are that no reform will happen at all.

LP Pure-Play Pot Stock Index Performance

The constituent price changes for the week ending April 9th were as follows, in descending order, with their YTD performances in brackets and any noteworthy news:

1. Rubicon (ROMJF) +7.4% to (-2.5% YTD) $2.76/share 
   • reported favorable Q4, 2020 financial results (see exclusive TM article here)
2. Hexo (HEXO): -0.5% (+75.5% YTD) to $6.46/share
   • launched its latest brand, Bake Sale, which offers Canadian consumers one of the lowest prices per gram in the country, in some cases as much as 20% less than competitor’s products.
3. Aurora (ACB): -2.5% (+7.2% YTD) to $8.91/share 
   • Given Aurora has an Altman Z-Score of -1.93, an indication that the company is in duress and could go bankrupt within the next 24 months, Will Ashworth wouldn’t touch it above $7.50 because of its crushing debt.
4. Cronos (CRON): -5.6% (+27.9% YTD) to $8.88/share 
   • no noteworthy news
5. Valens (VLNCF): -8.7% (+60.8% YTD) to $2.09/share 
   • announced that it has expanded its distribution network to five of the ten provinces in Canada with the agreement to supply products to the Manitoba Liquor & lotteries Corporation.
6. Canopy (CGC): -9.6% (+17.6% YTD) to $28.99/share
   • Jefferies analyst Owen Bennett, who has an underperform rating on shares, says Canopy's acquisition of Supreme Cannabis this week isn't that transformational for the company though it will help it with cost savings.
   • Piper Sandler analyst Michael Lavery said in a note that the acquisition helps fill a void in the Canopy's product line with a premium brand in Canada, but noted he wasn't expecting the deal to help with profitability.
7. Aphria (APHA): -10.2% (+135.3% YTD) to $16.28/share
   • no noteworthy news
8. Organigram (OGI): -11.3% (+129.3% YTD) to $3.05/share
   • announced the acquisition of The Edibles & Infusions Corporation (EIC) from AgraFlora Organics International Inc. for $22 million in shares of OGI plus up to an additional $13 million in shares of OGI receivable upon the EIC business achieving certain earn-out milestones.
9. Tilray (TLRY): -11.5% (+139.2% YTD) to $19.76/share
   • no noteworthy news

Measuring Volatility

Beta measures the volatility (the up and down movement) of a stock relative to the overall stock market and serves as a measure of the volatility of a stock compared to others in the same sector. What you see below is the extent of volatility of each stock in the munKNEE Pure-Play LP Pot Stock Sub-Index from most stable to most volatile:

1. Organigram: 0.99 (i.e. historically its stock moves more or less in tandem with the overall stock market)
2. Valens: 1.66x that of the overall market
3. Cronos: 1.73x more so historically than the overall market
4. Hexo: 1.74x
5. Rubicon: 1.75x
6. Canopy Growth: 2.15x
7. Aphria: 2.58x
8. Tilray: 2.79x
9. Aurora: 3.13x greater volatility than the average market

The average beta of the above stocks is 2.06x suggesting that if you’re going to invest in marijuana stocks, even the biggest and most famous names in the sector as noted above, you’ll need to brace for volatility.

(For more extensive financial information, charts, news releases and articles, and up-to-the-minute stock prices click on the stock ticker links above. All currency amounts are in U.S. dollars. Go here to convert to another currency.)