Marijuana Market Watch: Cannabis Stocks Soar As Marijuana Market Makes Across-The-Board Gains
Cannabis stocks welcomed the new year with soaring highs as the marijuana market made across-the-board gains on Tuesday, the first trading day of 2018. Broader markets outperformed expectations on Tuesday, especially in Canada where cannabis stocks were able to claim partial responsibility for a record high reached on the Toronto Stock Exchange. Increases were seen on all sides of The North American Marijuana Index, as the opening of California’s recreational adult-use market sent investors into a buying tizzy. The United States Marijuana Index saw some of its most significant gains in months following the rocky, but still successful launch of legalized cannabis in the state. Solactive’s North American Medical Marijuana Index hit another 52 week high on Tuesday, and the Horizons Marijuana Life Sciences Index ETF made an impressive increase as well. Fundamentals of the cannabis market were average this week, with prices holding steady just before the new year began.
Cannabis Benchmarks publishes a weekly look prices in the marijuana industry, capturing, “a high percentage of buy/sell wholesale transactions across local cannabis markets.” According to their reports, the Cannabis Spot Index, which looks at the price paid to cultivators, pre-tax, per pound for the week, was up .4 percent just before the new year. Cultivators could reasonably receive at $1,436 per pound at the end of 2017.
In a similar vein, the U.S. Cannabis Implied Forward Benchmark shows what wholesale buyers are willing to pay cultivators at some point in the future for a pound of cannabis. According to the Cannabis Benchmarks report for the week ending December 29, the Implied Forward curve was down $50 to $1475 per pound. As 2017 came to a close, the fundamentals of the cannabis market held steady in recent weeks but dipped dramatically compared to the end of 2016.
The North American Marijuana Index
The North American Marijuana Index jumped dramatically to begin the new year, climbing over 40 points for a 15 percent gain. Cannabis stocks celebrated the opening of California’s recreational adult-use market, while Wall Street celebrated a new year of tax reform. Investors welcomed the new year with big rallies in the tech sector as the Nasdaq went above 7,000 for the first time on Tuesday. The Dow Jones Industrial Average and the S&P 500 both saw significant gains as well.
All of that good news bode well for the United States Marijuana Index, which gained an impressive 11.99 points on Tuesday for a 12.84 percent gain. It was the Index’s most massive gain in some time, as investors are typically skittish due to issues with federal law. Still, nothing could hold back investors on Tuesday as everyone from Snoop Dogg to the mayor of Berkeley celebrated California’s progress.
Canada had an equally impressive day, as The Canadian Marijuana Index jumped 111.28 points for a 15.86 percent gain. In fact, cannabis stocks up north helped the TSX to reach a record high on Tuesday, buoyed by news of Aurora Cannabis’ 23.1 percent price increase. Canopy Growth and Aphria also gained 8 percent each, showing investors the cannabis is now part of the mainstream.
Solactive North American Medical Marijuana Index
Solactive’s North American Medical Marijuana Index climbed again on Tuesday, as it reached another 52 week high to begin the new year of trading. The Index, which looks at companies with significant holdings in the marijuana industry hit a high of 1783.45, following a 52 week low of 738.45.
Also gaining on Tuesday was the Horizon’s Marijuana Life Sciences Index ETF, which tracks off of Solactive’s Index. After previously closing at $18.93, the Index jumped $2.27 on trading volume of 2546835 for an 11.99 percent gain. The Index closed the first day of trading in 2018 at $21.20.
Winners and Losers
Looking at Tuesday’s cannabis stock winners and losers, DigiPath, Inc. was up $0.12 for a 32.98 percent gain on higher than average volume trading. The company closed the trading day at $0.50 per share. MPX Bioceutical Corporation (MPXEF) climbed an impressive 36.92 percent on higher than average volume trading to end the day at $0.89. Recently they closed a private placement offering for $26.5 million. MedReleaf Corp. (LEAF.TO) gained $5.68 per share for a 26.74 percent gain. The company finished the day at $26.92 per share.
On the other side of the market, CSA Holdings, Inc. (CSAX) fell over 19 percent on higher than average volume trading. They were down to $0.41 per share at the close of trading on Tuesday. mCig, Inc. (MCIG), cannabis’ newest cryptocurrency carnival barker fell .6 percent on Tuesday on higher than average volume trading to close out the day at $0.39 per share. Finally, United Cannabis Corp. (CNAB) saw a 6 percent drop on higher than average volume trading, closing out the day at $1.83 per share.
Stocks To Watch (And Watch Out For)
Cronos Group Inc. (MJN.V) announced a $30 million bought deal on Tuesday, with funds going towards general company needs. They gained almost 5 percent in trading on Tuesday, up $0.46 to close the day at $10.20.
For more on The Marijuana Index, including methodology go to marijuanaindex.com. For more on Cannabis Benchmarks, go to cannabisbenchmarks.com. For more on Solactive’s North American Medical Marijuana Index, go to solactive.com. For more on Horizon’s Marijuana Life Sciences Marijuana Index ETF, go to horizonsetfs.com/hmmj.