Canadian Cannabis Stocks Rally, Driving Marijuana Index Up 4% in October

Canadian Cannabis Stocks Rally, Driving Marijuana Index Up 4% in October

Pexels / Lukas / CC0 License

By Dan Nicholls

 
The North American Marijuana Index, a stock index that tracks the top performing cannabis stocks in the U.S. and Canada, increased 4% in October.

The North American Marijuana Index is a combination of the U.S. Marijuana Index and the Canadian Marijuana Index.
 

U.S. Marijuana Index

The U.S. Marijuana Index decreased 3% in October, its third consecutive month down. Seven constituents gained during the month, while 10 constituents fell.

The broader U.S. market saw strong results in October with the Dow Jones Industrial Average ending the month up 4.3% and the Russell 2000 up 0.8%.

Average volumes of all constituents on the U.S. Marijuana Index (excluding GWPH) picked up slightly, increasing 12% in October compared to September.

MJIN_US-Index-Oct-Web

Canadian Marijuana Index

After gaining 13% in September, the Canadian market maintained its upward momentum as the Canadian Marijuana Index increased 15% in October. This compared to a 0.4% increase in the S&P/TSX Venture Index, Canada’s leading small-cap index.

Eleven of the 18 companies on the Canadian Marijuana Index gained more than 10%, with four constituents increasing more than 30%: Canopy Growth (TSX:WEED), CannTrust Holdings (CSE:TRST), MedReleaf (TSX:LEAF), and CanniMed Therapeutics (TSX:CMED).

Several major pieces of news headlined the month:

  • On Oct. 2-3, Alberta and Quebec introduced new adult-use cannabis regulations for their provinces. The Canadian Index increased 3% and 0%, respectively, on those days.
  • On Oct. 17, the TSX issued a notice underlining that U.S. federal law takes precedence over state laws, and that issuers that violate the federal law are not complying with the TSX listing requirements. The Canadian Index fell 6% that day.
  • On Oct. 30, Constellation Brands (NYSE:STZ), a leading international producer and marketer of alcohol products, announced a C$245m investment for 9.9% of Canopy Growth (TSX:WEED), the largest Licensed Producer in Canada. Canopy’s stock increased 19% on the day of the announcement. The investment is a major milestone for the entire cannabis industry, and in the week since it was announced, the Canadian Index and U.S. Index have increased 22% and 15%, respectively.

MJIN_Canadian-Index-Oct-Web

Marijuana Stock Universe

The Marijuana Stock Universe, which includes all U.S. and Canadian stocks with an involvement in the cannabis or hemp industry, saw an average decrease of 2% in October. The results varied across sectors, as six sectors decreased and five sectors increased for the month.

MJIN_Index-Universe-Oct-Web

For more information on October’s results, please click the link below for a downloadable PDF: Marijuana Index – October 2017 Summary Report.

Dan Nicholls, CFA, is Vice President of the MJIC Marijuana Index.

Guest Contributor designates a writer who is guest publishing content with MJINews.

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