Weekly Cannabis Report: The Demise Of Canadian Small-Caps – Seeking Alpha

Welcome to our Weekly Cannabis Report, a reliable source for investors to receive the latest developments and analysis in the cannabis sector.

Trading Summary

Cannabis stocks continued to decline last week. Horizons Marijuana Life Sciences Index ETF (HMLSF) fell 2.6%, ETFMG Alternative Harvest ETF (MJ) lost 3.1%, and Horizons U.S. Marijuana Index ETF dropped 0.6%.

(Source: Bloomberg)

Canadian Large- and Mid-Cap: Canadian large-caps declined across the board reflecting the current downturn. Tilray (TLRY) dropped 9% after acquiring a Canadian cannabis retail chain for C$110 million.

Canadian Small-Cap: WeedMD (OTCPK:WDDMF) rose 3% after reporting a big jump in revenue. Emerald (OTCQX:EMHTF) dropped 8% after reporting Q2 results. Zenabis (OTCPK:ZBISF) rebounded 8% after falling 28% in the prior week due to a financing deal.

(Source: Author, based on public data)

U.S. Large-Cap: Last week was busy as many MSOs reported earnings. Post earnings, Cresco Labs (OTCQX:CRLBF) gained 10%, Harvest Health (OTCQX:HRVSF) gained 6%, Cresco Labs (OTCQX:CRLBF) gained 5%, Green Thumb (OTCQX:GTBIF) gained 8%, and iAnthus (OTCQX:ITHUF) dropped 2%. Acreage Holdings (OTCQX:ACRGF) dropped 20% as we think the stock is facing the biggest fear we outlined when it sold itself to Canopy earlier this year.

U.S. Small-Cap and Ancillary: Sunniva (OTCQB:SNNVF) dropped another 10% after reporting a 64% drop in revenue. TILT (OTCQB:SVVTF) fell 14% after reporting lower-than-expected revenue growth. Harborside (otc:HSDEF) gained 42% after announcing Q2 results along with a Normal Course Issuer Bid which allows repurchases up to 5% of its shares.

(Source: Author, based on public data)

Industry News Looking Ahead

When we issued our 2019 Top Cannabis Picks, we explicitly warned investors that the Canadian small-cap space will likely face a bumpy ride this year. As the Canadian market got off to a tough start, the sector is facing tough financial realities after several quarters

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