Marijuana Stocks In Canada Dropped 5.5% In November

New Cannabis Ventures recently shared graphs that depict how Canadian cannabis stocks are doing. Over the last month, the Canadian Cannabis LP Index continued to extend its losing streak to five months after decreasing again in November by 5.5%, falling to a price of 225.6.

This isn’t the first time the index has dipped low, but it’s actually the lowest it’s been for a while. In 2020, the index dropped 30% to 275.16, and now it’s currently down 22% over the past year. These numbers haven’t seemed to reach anywhere remotely close to what they were in 2018 during Canadian cannabis legalization, which peaked at 1314.33.

The index saw its lowest during March 2020 when it fell to 196.10, which hasn’t been seen since 2016. The Canadian LP Index is rebalanced and assessed monthly, and it includes 39 qualifying publicly-traded licensed producers who made trades in Canada at the end of October.

All members were included in a sub-index, divided by the success of the players at hand. Four members were in the Canadian Cannabis LP Tier 1 Index, 15 in Tier 2 Index, and 20 in Tier 3 Index throughout November.

The rules for inclusion were also revised in June 2020, which states how companies must have a price of at least $0.20 unless they’re making at least $2.5 million quarterly from their cannabis productions. The rules used to require companies with revenue over $1 million for stocks traded below $0.20.

Dozens of publicly-traded LPs in Canada are failing to meet requirements, meaning they don’t qualify. Within the tiers noted above, we’re going to focus on the large players in the game in the Tier 1 section.

Tier 1 includes LPs generating the most cannabis-related revenue, at least $25 million per quarter. Tier 1 dropped 5.1% to 402.42 in November. The group also dropped to 488.96 in 2020 when the year ended, falling by 23.9%. Now, throughout 2021, it declined 17.1%.

There have also been some rule changes regarding the minimum revenue required. Early 2021, it was raised to $20 million, and throughout 2019 and the first half of 2020, companies were required to generate revenue of over $10 million to be included. 2018 was as low as $4 million.

Tier 1 includes companies and producers generating the most in the cannabis industry, including Aurora Cannabis, Canopy Growth, Tilray, and Village Farms. The company that produced the most revenue was Tilray, at +1.5%. For the second straight month, the lowest was Canopy Growth, at -12.3%.