The American Multi-State Operators (MSOs) component of the munKNEE Pure-Play Pot Stock Index has 21 constituents and it dropped 1.4% this past week compared to a decline of 8.2% for the Canadian Licensed Producers (LP) component (see exclusive TM article here). This article identifies the primary MSO winners and losers last week and and each of their betas.

When so many stocks in the same industry sink, there's usually are common denominators 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.

MSO Pure-Play Pot Stock Index Performance

The criteria for being included in the munKNEE MSO Pure-Play Pot Stock Sub-Index is that the constituents are multi-state operators that consistently trade for a minimum of US$1/share and generate 100% of their revenue directly from the sale of cannabis products.

Only 5 constituent stocks advanced this past week with one having no change in price and 15 declining in price. Of the 21 stocks, however, only 7 stocks changed prices by 5% or more, as follows, with their YTD performances in brackets:

1. Planet 13 (PLNHF): +16.0% (+28.4% YTD) to $7.18/share
   • reported favorable Q4, 2020 financial results
2. C21 Investments (CXXIF): -5.1% to (-8.5% YTD) $1.29/share
3. Ayr Wellness (AYRWF): -6.5% (+17.5% YTD) to $27.93/share.
4. Vireo Health (VREOF): -8.2% (+52.0% YTD) to $2.25/share
5. Trulieve (TCNNF): -9.4% (+29.5% YTD) to $41.00/share
6. IM Cannabis (IMCNF): -13.5% (-15.0% YTD) to $6.61/share
7. HempFusion (CBDHF): -16.6% (N/A) to $1.66/share
   • reported less than favorable Q4, 2020 financial results

The other 4 constituents that advanced last week were Harvest Health, Jushi, TerrAscend and Verano with Medicine Man having no change in price. The other 9 constituents that declined during the week were: Cresco, Curaleaf, Green Thumb, Lowell Farms, Harborside, Acreage, Columbia, Charlotte's Web and cbdMD. 

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 are the 7 most stable stocks in the munKNEE Pure-Play MSO Pot Stock Sub-Index and the 5 most volatile:

The Most Stable

1. Ayr Wellness: 1.23x (i.e. historically its stock has moved only 23% more than the overall stock market)
2. cbdMD: 1.40x that of the overall market
3. Medicine Man: 1.46x more so, historically, than the overall market
4. TerrAscend: 1.51x
5. Columbia: 1.81x
6. Curaleaf: 1.86x
7. Trulieve: 1.96x (i.e. almost twice as volatile as the overall stock market)

The Most Volatile

1. Jushi: 8.34x (historically 8.34 times more volatile than the overall stock market)
2. Harvest Health: 4.02x
3. C21 Investments: 3.99x
4. Planet 13: 3.18x
5. Harborside: 2.96x (i.e. almost triple the historical volatility of the overall stock market)

The remaining 9 constituents in the munKNEE Pure-Play MSO Pot Stock Sub-Index have volatility that range, historically, between 2.16x and 2.66x that of the overall stock market.

The average beta of the above stocks is 2.69x 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 the sake of comparison, the average beta of the 9 constituents in the munKNEE Pure-Play LP Pot Stock Sub-Index currently is 2.06x as outlined in this TM article here. 

(For more information on the reason(s) behind the changes outlined below you are urged to click on the stock symbols provided by TalkMarkets, where additional information is provided. All currency amounts are in U.S. dollars. Go here to convert to another currency.)