You’d think that after a week of recreational marijuana being legal in the country of Canada, a lot of the leading cannabis stocks would be booming – but in the case of standout cannabis sector firm Canopy Growth Corporation (CGC), the stock has lost over 20% of its value in just a couple of weeks, moving from a high of $55 per share down to around $40 today.
That said, CGC’s CEO Bruce Linton is undaunted.
In an interview yesterday with CNBC, Linton talks about why price drops may be occurring, and why he’s still confident about the company’s products.
“Our products are selling out,” he said, referencing enormous order volumes over cannabis platforms. He also referenced international growth, which he said will be a key driver.
“After 90-plus years of prohibition, people are buying the product,” Linton said.
As far as the selloff, Linton cited key changes in holdings as a potential reason why Canopy Growth stock is slumping instead of soaring this week.
“The stocks were going up, and people took profits, and there’s probably a transition from retail holders to institutional holders,” Linton said, “because (institutional investors are) thinking: ‘this could be a global outcome, and Canada has the best structural program which is being adopted in many countries around the world.’”
Discussing the merits of the underlying operations and how marijuana equities may be different than, say, crypto, Linton called cannabis “medically relevant,” pointing to the enduring value of the company’s products, and said he’s been going around the world presenting to institutions on a regular basis, including audiences in the UK, America and France.
Institutional interest, he said, is in many cases somewhat new.
“Before, it was all retail,” Linton said. “There’s a lot of institutional eyes on it.”
Asked about ‘moral pushback’ that might lead government agencies or other big players to be slow to involvement, he said many “tier 1” institutions are rethinking the idea that they can’t get involved because of cultural norms.
“For a long time, they just said ‘it’s marijuana; we can’t look into it,’” he said. “They see it as a global disruptor.”
All of that thinking supports the idea held by a lot of cannabis enthusiasts that the dip is really a short term thing. Also, as with many other stock crashes, Canopy Growth is still far above its moving averages over the summer, and towering above any value that traders held prior to August.
Canopy is also not the only marijuana stock that’s significantly down – since a high on October 15, Tilray, a major Canadian pharmaceutical cannabis company in British Columbia, moved from a high of over $160 down to under $120.
None of that is great for day traders – many of whom are probably holding onto their positions to try to ride out the instability. Look for more next week when markets potentially reset.