Canada’s Pot Stocks Struggle a Year After Legalization

On Oct. 17, 2018, the world watched as Canada took the monumental step of launching its nationwide adult-use cannabis market. Capital was flowing and expectations were high that leading Canadian cannabis companies could be well-poised to dominate the global cannabis game.

“We are absolutely headed in the right direction,” Kirk Towsaw, a longtime Canadian activist and NORML Canada’s Pacific Region Director told Cannabis Now. “Canada’s federal legalization has shown that prohibition can end and the worst fears of prohibitionists have not manifested. This will likely have a ripple effect internationally and hasten the end of worldwide cannabis prohibition.”

This week, on the one year anniversary of Canada’s first legal marijuana sales, Bloomberg reported the market has seen 1.1 billion dollars in sales of cannabis.

However, the confidence in Canadian cannabis companies hasn’t remained at that day-one level — at least when it comes to the stocks of some of the nation’s biggest Licensed Producers (the select few dozen companies licensed to grow and distribute cannabis in the Great White North).

When it comes to stocks attached to that progress, a lot of the talk has been around their volatility as investors wait to see how things pan out long term. According to an Investopedia report published this summer, the top three Canadian cannabis earners by revenue in the first half of Canadian cannabis sales were Canopy Growth Corp., Aurora Cannabis and Aphria. However, all three companies have seen their stock slide downhill in recent months.

Canopy

Canopy Growth Corp’s $83 Million CAD was the biggest take for a Canadian cannabis company in quarter three of fiscal year 2019, according to Investopedia. Yahoo Finance noted on the company’s stock volatility, but noted the experts don’t even agree on what the future for the company’s earnings will be. Some are expecting the stock to outperform expectations, while others think it will come up short.

One of Canopy’s biggest backers, Constellation Brands, had been receiving some flak for the impact Canopy’s performance. Last year, they put one of their own on to the Canopy board, Chief Financial Officer David Klein — and last week, he took over the board’s leadership. Klein looks to right the ship after 30 years in finance.

“I’m excited to serve as Canopy Growth’s new Chair of the Board of Directors,” said Klein in a statement at the time. “There is no company better positioned to win in the emerging global cannabis market. I look forward to continuing to work with Canopy Growth’s very talented leadership team to position the company for long-term, industry-leading profitable growth.”

However, also last week, the Motley Fool tipped Canopy as one of the cannabis stocks they don’t expect to be profitable for a few years.

Canopy shares started the year worth $28, and peaked at $53 in late April. The stock has since cooled off and is trading around $20.

Aurora Cannabis

Aurora came in second in revenue for the third quarter in 2019 compared to other Canadian cannabis companies. The total take was $54.2 million, but only $47.6 million was from cannabis.

The company has entered the U.S. CBD market, and just announced a research collaboration with the Ultimate Fighting Championship’s Performance Institute to research CBD’s impact of the recovery of the UFC’s athletes.

Aurora’s stock is worth considerably less than Canopy. It peaked this year with a value just under $10. Currently, it’s sitting a little under $4.

Aphria

Investopedia noted Aphria as one of the biggest movers in the pack this year. The $20.7 million in revenue they did in Q3 was triple the same time period the year before.

Aphria’s stock started the year at $6. It jumped to almost $11, but has since slipped back down to a little under $5 a share.

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