Canadian cannabis stocks have continued to stagnate in February. The S&P/TSX Index had retreated over 90 points towards the end of the noon hour on Tuesday, February 13 as U.S. stocks also struggled. A cannabis market that is still sitting on the results of an incredible rally that began in the late summer is at risk of correcting further. Investors should be prepared to see more consolidation ahead of recreational legalization, expected in July 2018.
Aurora Cannabis Inc. (TSX:ACB) was down 0.88% during early afternoon trading. Aurora recently became the largest producer in Canada, but has struggled since its pricey acquisition of CanniMed Therapeutics Inc. The company also stepped into the retail market in Western Canada by purchasing close to a 20% stake in Liquor Stores N.A. Ltd., an alcohol beverage retailer based in Edmonton.
Canopy Growth Corp. (TSX:WEED), the second-largest producer in the country, was down 0.93% in early afternoon trading. Shares of Canopy Growth have dropped 10.4% in 2018 thus far. On February 7 Canopy Growth completed a bought deal led in part by Bank of Montreal Capital Markets and GMP Securities LP worth $200 million. Canopy Growth is now trading almost $20 off of its all-time high of $44 reached in early January. Some analysts, like Russell Stanley at Echelon Wealth Partners, are expecting a steeper decline and have maintained a “Sell” rating.
Aphria Inc. (TSX:APH) was up 0.32% in early afternoon trading. Aphria recently closed its acquisition of Broken Coast Cannabis for about $230 million. This will raise Aphria’s annual production to 230,000 kilograms which it projects to reach by February 2019. Shares have dropped 16.1% in 2018 so far.
