While the first quarter of 2019 has seen some extremely strong performance from the marijuana industry, the second quarter of the year has been more of a struggle.
Both April and May have seen disappointing results for an industry that’s been promising explosive growth, especially in light of the upcoming second wave of Canadian legalization that will open up CBD-edibles to the public.
While this legislation is expected to help surge Canadian cannabis stocks, American producers of CBD, an industry now surging thanks to the legalization of hemp agriculture, were expected to rise in association. However, June ended up being another bad month for American marijuana stocks, having ended the month down 8 percent.
According to New Cannabis Ventures, their American Cannabis Operator Index fell by 8 percent over the course of the month. The first couple of weeks saw substantial declines as the index fell from 95 to around 80, before surging mildly in the second half of the month and ending around 87.
Overall, the index, which tracks major U.S. cannabis companies, ended the month down in what is the third consecutive monthly loss and having lost 23.8 percent of its value in Q2 2019.
The index tracks 30 major companies, including 25 multi-state operators that are focused solely on industrial CBD hemp extraction. Only four of these companies managed to see double-digit gains. In comparison, 14 saw double-digit losses, with three of those businesses losing more than 25 percent of their value in June.
The worst performer was DionyMed Brands (CSE: DYME)(OTC: DYMEF), which fell by over 40 percent and recorded all-time lows during June. Body and Mind Inc (CSE: BAAM)(OTC: BMMJ) dropped by around 39 percent in June, the second biggest loser in the U.S. cannabis sector. Interestingly enough, Body and Mind was the best performer in the index in the previous month, gaining by 24 percent.
At the same time, the four best performers in the index happened to be among the worst performers for May, with each having fallen by 20 percent in the month prior and now regaining most if not all of those losses.
The biggest winner on the index was MJardin Group (OTC: MJARF), which has seen gains of over 40 percent, outperforming the second biggest winner, MedMen Enterprises (CSE: MMEN)(OTC: MMNFF) drastically.
However, that’s not to say that MJardin is a viable long-term investment by any means, as since the beginning of 2019 the stock has lost over 60 percent of its value, plummeting from C$5 per share to down to it’s currently C$1.73 per share.
The index also removed a number of well known companies for not having enough trading volume, Dixie Brands (CSE: DIXI)(OTC: DXBRF) and Vireo Health (CSE: VREO) fall into this category.
Time will tell how the rest of the year will fare for cannabis stocks. So far, the first half of 2019 has still left most stocks in the positive, but that’s also because share of most marijuana companies fell to extreme lows in late 2018.
With this in mind, many cannabis companies still haven’t fully recovered from their pre-Q4 2018 prices, something that’s unlikely to happen for at least a few more months.