E Cannabis Central: Marijuana Company Deals Flourished In June & July But Most Of Their Stock Prices Floundered

What is driving this activity?

Well, cannabis companies:

  • are betting on U.S. legalization soon and want to lock-down access to the key U.S. market once cannabis becomes legal under U.S. federal law,
  • are looking for ways to reduce costs through economies of scale, and
  • want to be vertically integrated and horizontally diversified across all segments in the value chain.

Conclusion

One would think that the above transactions would have resulted in positive sentiment and caused the stocks involved to appreciate but that was, simply, not the case. Of the 18 companies mentioned only 3 - Neptune Wellness Solutions Inc., Curaleaf Holdings Inc. and Fire & Flower Holdings Corp. - saw increases in their stock prices during the month of July (by +32.4%; +11.5% and +15.6%, respectively), while the average change in the stock prices of the other 15 companies declined by 21.6%. Who would have thought that would be the outcome? 

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