Is the Green Organic Dutchman a Buy-Low Opportunity or a Falling Knife?

The Green Organic Dutchman (TSX:TGOD) completed its initial public offering back in early May. The stock rolled out during a period of flux for the cannabis sector, but managed to catch fire along with its peers in mid-August after Constellation Brands made an additional $5 billion investment into Canopy Growth (TSX:WEED).

Shares debuted at a price of $3.65. Now, in late afternoon trading on October 22, the stock is in jeopardy of falling below its IPO price. Shares were down 14.8% with less than an hour to go on the first trading day of the week. The stock is now down over 40% month over month.

Aurora Cannabis (TSX:ACB), which boasts an ownership position exceeding 10%, dumped over 5.7 million shares between October 10 and October 16 at an average share price of $5.71. Its stock has also been pummeled by the global stock market sell-off and now the most recent turbulence in the cannabis sector following recreational legalization.

Green Organic Dutchman secured an additional $76 million in bought-deal financing late last week. The company aims to operate in 12 countries on three continents by the end of 2018 and is on track to open five dispensaries in Jamaica by the first quarter of 2019.

Like other producers, its international expansion may become the prime focus for investors even as Canada moves forward on its domestic roll out. Still, this chaotic legalization process will likely result in volatility for the sector well into next year. Investors on the hunt for bargains should be prepared to weather turbulence.