For the trading week ended September 18, my proprietary Canadian Cannabis Company Index (MCCCI) increased by less than 1.0% compared to last week when it decreased by 6.0%. The index consists of 25 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.

The MCCCIs 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. As I have said here before, I also believe there will be a pronounced reset in this sector, likely in Q3 or Q4 of this year including but not limited to business failures, consolidation, and a significant downtrend in valuation. My recent mid-year report showed that the MCCCI had decreased by 36% YTD, which may be a guidepost for the rest of 2020. The survivors will be those companies that can operate profitably when the equilibrium price is established by the supply/demand dynamics. Based on Q3s continued volatility, it appears that the sector will most likely experience more frothiness going forward. Now let us look at this week’s good, bad, and ugly stocks.

THE GOOD

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

 48North Cannabis Corp. (PINK: NCNNF) +16.7%

NCNNF is the lowest market capitalization stock in the MCCCI, and this increase had a de minimis effect on the Index.

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 was 1 stock that decreased by 20% or more, which is my metric for inclusion in this category:

Zenabis Global Inc. (PINK: ZBISF)  -37.5%

ZBISF is in dire need of capital, and in my view has an uncertain future.

VALUATION METRIC REVIEW

There was a 0.09% increase in the “Big Four,” compared to last week’s decrease of 2.0%.  

RECAP

The relative strength index decreased by 2.1% compared to last week’s decrease of 6.0% as the 1^st and 2^nd quartile stocks performed comparatively better this week. Let us see how this volatile sector has performed at the same time next week shall we?