Global Cannabis Stock Index Meltdown in September, 'Didn't Matter Much,' Expert Says

In September, the Global Cannabis Stock Index closed low on 9/30 and ended the month down 25.9%, wrote Alan Brochstein, CFA and founder of New Cannabis Ventures and 420 Investor.

Cannabis Companies Affected

According to New Cannabis Ventures, the strongest 4 names in September all fell:

• Innovative Industrial Properties IIPR: -3.5%
• Chicago Atlantic Real Estate Finance REFI: -5.6%
• Cronos Group CRON CRON: -7.5%
• Turning Point Brands TPB: -9.0%

“Innovative Industrial Properties fell the least, but it lost 19.5% during Q3 and is down 66.3% year-to-date. Chicago Atlantic, and IPO from late 2021, fell just 4.3% during Q3 and is down just 13.5% year-to-date,” according to Brockstein. “Cronos Group was unchanged during the quarter and is down 28.1% year-to-date. Turning Point Brands, a hybrid business, dropped 21.7% during the quarter and is down 43.8% so far in 2022.”

Image by New Cannabis Ventures

The 4 weakest names in September all declined by over 40%:

• Leafly LFLY: -57.0%
• Ayr Wellness AYRWF AYR: -46.6%
• Hydrofarm HYFM: -42.9%
• Trulieve TCNNF TRUL: -40.6%

The report noted that “Leafly was the worst stock for the second straight month. It has dropped 93.2% since the end of 2021 when it was trading as a SPAC.” Moreover, “in Q3, it dropped 84.9%. Ayr Wellness lost 84.4% in 2022, and it fell 52.2% in Q3. Hydrofarm, down 93.2% year-to-date, like Leafly, dropped 44.3% during the quarter. Trulieve has declined 67.3% so far in 2022, and it fell 43.9% during Q3.”

Not Too Bad

In September, Q3 turned into a massive loss of 23.7% for the index.

Nevertheless, Brochstein's new report noted that “despite including the worst month [Sep.] in three years, the quarterly return, which was also bad historically, was not nearly the worst:”

Image by New Cannabis Ventures
"Year-to-date, the Global Cannabis Stock Index has declined 65.7%, and it is down 75.0% from a year ago," said Brochstein. However, "the continued decline seems unjustified. There were no negative industry news or known material changes in company operations."

"We think that the return of the bear market to stocks, which posted a new low last week, has delayed a resumption of interest in our sector from investors," stated Brochstein. "We believe that the upcoming earnings season if it passes without large disappointments, could help investors to better appreciate the sector’s valuation and growth prospects."

Photo: Courtesy Of Christine Roy On Unsplash