Debra Borchardt
The Green Market Report Cannabis Company Index started 2019 on a high note as the first quarter jumped 40%, but the air came out of the market during the second quarter and the entire group took a tumble. Many of the cannabis stocks slid as much as 20%. This happened despite the number of large deals announced during the quarter that set the stage for massive consolidation.
The Green Market Report Index fell 21% in the second quarter but is still up by 19% for the six months of 2019. To get an idea of how poorly the cannabis stocks performed, the S&P 500 rose by 4.3% in the second quarter. Worries over the trade war with China did dampen the broader market and funds are flowing more into the bond market, but the equities still managed to squeak out a positive performance.
Cannabis companies are vying to be the largest in the industry and the latest round of mergers and acquisitions perfectly illustrate this. While there were numerous positive events that occurred during the quarter, the selloff refused to reverse course no matter what good news came out. The selloff has continued into the third quarter and still hasn’t shown any signs of bottoming out yet.
The selling hasn’t diminished the appetite of investors. Funds like Merida Capital’s $200 million fund continue to get launched and money continues to flow into the sector. Viridian Capital Advisors reported that by the end of June 26 the industry had completed 339 capital raises versus 305 capital raises for 2018. The total amount raised in 2019 for the first six months was $7.3 billion versus 2018’s $4.5 billion. A handful of names actually managed a solid performance in the second quarter, but it became a contest of who could control the bleeding.
Top Best Performing Stocks – Second Quarter 2019
| Innovative Industrial Properties | 55% |
| GrowGeneration | 10% |
| GW Pharmaceuticals | 3% |
| Cronos Group | -1% |
| Canopy Growth | -5% |
The Bottom 5 Worst Performing Stocks – Second Quarter 2019
| TILT Holdings | -55% |
| Emerald Health Therapeutics | -41% |
| Sunniva | -40% |
| iAnthus Holdings | -40% |
| MariMed | -40% |
The following changes have been made to the Green Market Report Cannabis Company Index. CannTrust (NYSE: CTST) is being removed as a result of the company’s scandal involving the growing of plants in rooms that were not licensed and Isodiol (OTC: ISOLF) is being removed based on valuation. Two companies have been added to replace the ones removed and they are Valens GroWorks (CSE: VGW) and Green Growth Brands (GGB).
The full report is available in the Report section on the website for $9.99. The GMR Index Review for the First Quarter is now available for free.
