You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.
Two weeks ago, we lamented the horrible start to 2022 for cannabis stocks, pointing to the 18.4% decline in the New Cannabis Ventures Global Cannabis Stock Index during the first four weeks of the year.
The New Cannabis Ventures American Cannabis Operators Index, which currently includes 19 members , has increased by 22.6% since January 28th, a level that was the lowest closing price since October 2020.
The Verano acquisition of Goodness Growth has been one factor helping performance, evidenced by spectacular returns in smaller companies subsequently on hopes of more M&A, but the sub-sector of the market is enjoying broad interest over the past two weeks.
While the rebound by the MSOs has certainly played a key role in the improvement in the Global Cannabis Stock Index, other types of stocks have contributed as well.
This rally also seems to be partially tied to hope for federal regulatory reform, which we think will be slow to play out, but there are other factors as well, including consolidation, as discussed above, but also two fundamental changes ahead, including easier year-over-year comparisons for cannabis sales as well as the introduction of adult-use cannabis in New Jersey.
We are within about two weeks of the beginning of Q4 financial reports for the leading MSOs, and this will be a good test of the resilience of this rally.
Cannabis stocks are bouncing as stocks in general and other more speculative assets are stabilizing after a tough start to the year.
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