Cannabis stocks are very volatile with major ups and downs in their stock prices on a daily basis but if you were to invest in one of the 8 major consumer and pharmaceutical companies that have bought into marijuana companies you could reduce such volatility by more than 50%.

The new Conservative Pot Stocks Index tracks the performance of those 8 stocks and compares them with their associated cannabis stocks and with Canadian Licensed Producers, American Multi-State Operators, Ancillary Pot Stocks, and Cannabis-Centric Bio-Pharmaceutical Stocks. The performance of the constituents of the Index with that of their marijuana partner so far in the month of April are as follows, in descending order:

1. Anheuser-Busch InBev SA (NYSE: BUD): +11.1%; Beta: 1.53
   • has a $100 million joint venture with Tilray Inc. (Nasdaq: TLRY): -26.0; Beta: 2.79
2. Constellation Brands Inc. (NYSE: STZ): +5.8%; Beta: 1.20
   • owns 39% of Canopy Growth Corporation (NYSE: CGC): -15.2%; Beta: 2.15 and if it exercises its warrants and converts its notes will own 55% of Canopy Growth shares.
3. Novartis AG (NYSE: NVS): +5.8%; Beta: 0.51
   • has a global agreement with Tilray Inc. (Nasdaq: TLRY): -26.0%; Beta: 2.79 allowing it to use the Sandoz supply chain, sales force, and global distribution network.
4. Alimentation Couche-Tard Inc. (ANCUF): +4.9%; Beta: 0.93
   • has a 9.9% ownership in Fire & Flower Holdings Corp. (FFLWF): -8.0%; Beta: 2.39, with the potential to increase to  50.1%.
5. Molson Coors Brewing Company (NYSE: TAP): +3.9%; Beta: 1.11
   • has a 57.5%/42.5% joint venture, called TRUSS, with Hexo Corp. (NYSE: HEXO): -12.2%; Beta: 1.74
6. Imperial (Tobacco) Brands PLC (IMBBY): +1.3%; Beta: 0.88
   • has a 19.9% stake in Auxly Cannabis Group Inc. (CBWTF): -3.2%; Beta: 0.74
7. British American Tobacco (BTI): -0.5%; Beta: 0.86 
   • has a C$221M investment and product development partnership with Organigram Holdings Inc. (OGI): -26.5%; Beta: 0.99
8. Altria Group, Inc. (NYSE: MO): -7.0%; Beta: 0.64
   • has a 45% stake in Cronos Group Inc. (Nasdaq: CRON): -15.6%; Beta: 1.73

In summary

On average, the above 8 stocks:

• are +4.7% so far in April compared to their marijuana partners which are -20.2% so far in April and
• have a beta (a measure of volatility in stock price) of less than the overall market at 0.96, on average, compared to their marijuana partners which have an average beta of 1.91 or almost double that of the overall market.
• have dividends (excluding Molson Coors) that currently yield 4.2%, on average, while none of their marijuana partners have dividends.

When determining where to invest in the cannabis stock sector it is imperative to understand how the various categories in the sector differ in their respective performances so, to put things in perspective, below is a comparison of the performances so far in April of each of the 5 indices that munKNEE.com tracks:

1. Conservative Pot Stocks Index: +4.7% (see details here)
2. American Pure-Play Multi-State Operators (MSO) Pot Stock Index: -4.4% (see details here)
3. Ancillary Pot Stocks Index: -5.2% (see details here)
4. Canadian Pure-Play Licensed Producers (LP) Pot Stock Index: -10.6% (see details here)
5. Pure-Play Cannabis-Centric Bio-Pharmaceutical Stocks Index: -16.4% (details coming in a weekend article)

Conclusion

Taking a look at the performance of the above stocks, conservative investors who want stable stocks but also would like to be somewhat invested in the marijuana sector should consider investing in the above-mentioned major corporations rather than in their associated cannabis companies. Also, if conservative investors would like to take on a little more risk they should review the other categories mentioned above before putting their money in play.