Cannabis stocks were pummeled across the board on Wednesday, with many of the big names in the sector taking a bath in the red and failing to keep up with the main indices.
By the late morning, the North American Marijuana Index, which keeps tabs on the leading cannabis stocks in the US and Canada, had dropped 0.4% to 111.59. The Horizons Marijuana Life Sciences Index ETF, meanwhile, shed 1.3% to $9.08, while the OTCQX Cannabis index fell 0.34% to hit 432.07.
At the top of the list of stocks in the doldrums was Sunniva Inc (OTCQB:SNNVF) (CSE:SNN), which saw its shares drop 12.8% to US$0.23 and 8.8% in Canada at C$0.31. Prior to the market open, the Vancouver-based company revealed it had been named in a lawsuit alongside its subsidiary 1167025 BC Ltd, which centers on loans of roughly US$7 million Matrix Venture Capital Management made to Sunniva back in August and October of 2019. Matrix is looking to secure loan payments Sunniva allegedly owes.
Shares of Hexo Corp (NYSE: HEXO) (TSE:HEXO) also took a tumble, dipping by 2% to US$2.12 and 1.7% to C$2.81 in the wake of the publication of a pessimistic note published on Seeking Alpha by an undisclosed financial analyst who writes under the pen name Market Mind. In the column, the analyst expressed skepticism about the Canadian cannabis company’s business strategy. “Its inability to control expenses in a timely fashion, lack of foresight about slowing future demand and pricing pressure, which would make stocking up on inventory seem illogical (as buying inventory later would be cheaper) and management’s reluctance to provide clarity rather than exuberance, are warning signs,” he wrote.
Bucking the negative trend was GrowGeneration Corp (NASDAQ:GRGW), a US cannabis retailer established in 2014 in Pueblo, Colorado, which saw its shares pop by 2.37% to US$4.11 in its second morning of trade on the Nasdaq. In a statement, CEO Darren Lampert said the company’s up-listing to the Nasdaq from the OTCX would rachet up its liquidity and allow it to woo more institutional investors. “This up-listing to NASDAQ is a major corporate milestone and reflects the financial performance of our company,” Lampert said.
Also registering a pop was The Green Organic Dutchman Holdings Ltd (OTCQX:TGODF) (TSE:TGOD), which saw its shares climb 4.6% to US$0.66 and 1.2% in Toronto at C$0.85. This week, the Canadian cannabis behemoth revealed it is increasing the size of a bought deal financing plan to raise an additional C$2 million.