Cannabis Chart Of The Week: Are Ancillary Sectors Participating In The Rescheduling Price Upswing?
The graph depicts the stock price performance of baskets of stocks in six different cannabis industry subsectors. Each basket consists of the top four or five U.S. companies in each group. The stocks in each basket are equally weighted, and the basket prices are indexed so that August 25, 2023 (the Friday before the HHS announcement) equals 100.
Hundreds of articles (our own included) have analyzed the critical benefits of 280e removal, and, as expected, MSO prices have traded over 2x pre-HHS levels since the beginning of the year. We remain surprised that neither the PR Newswire leak of the DEA intentions nor Biden’s announcement has significantly rallied plant-touching stocks further. We remain incredulous that Canadian LPs are the second best-performing group on the chart despite their lackluster earnings reports and marginal-at-best cash flows.
The brown line shows the top four ag-tech stocks, including Scotts Miracle Grow (NYSE: SMG), GrowGeneration (NASDAQ: GRWG), Hydrofarm (NASDAQ: HYFM), and Urban Gro (NASDAQ: UGRO). Rescheduling should benefit this group via the higher capital spending fostered expansion of cultivation capacity. New adult use states, including Ohio and, potentially, Florida and Pennsylvania, should also boost business. We do …