Marijuana ETFs Slide In Rough Summer

August 02, 2019

It's been a rough summer for cannabis.

Stock prices for several marijuana companies have plummeted due to worse-than-expected revenues from sales of legal cannabis in Canada and various corporate scandals.

Over the past three months, the ETFMG Alternative Harvest ETF (MJ) has fallen 21%, while the AdvisorShares Pure Cannabis ETF (YOLO) has fallen 23%. Meanwhile, the SPDR S&P 500 ETF Trust (SPY) rose 3% over the same period:

 

Source: StockCharts.com; data as of July 31, 2019

 

Weaker-Than-Expected Earnings

One of the most significant factors driving the sector lower has been weaker-than-expected earnings reported from several cannabis companies in Canada, where recreational marijuana was fully legalized for adult use late last year.

In their latest earnings calls, Canopy Growth, Cronos Group, Aurora Cannabis, OrganiGram and other market leaders all reported losses for Q3 2018, the period in which legalization was implemented.

Over the month of July, Canopy Growth's stock price fell 21%, Cronos Group’s fell 13%, Aurora Cannabis’ fell 20% and OrganiGram’s fell 10%.

 

Top Holdings in Cannabis ETFs

MJ YOLO
Stock % In Portfolio 1-Mo. Return Stock % In Portfolio 1-Mo. Return
GW Pharmaceuticals (ADR) 9.21% -6% Innovative Industrial Properties 6.28% -17%
Cronos Group 8.12% -13% OrganiGram Holdings 5.49% -10%
Tilray 7.94% -18% Village Farms International 5.21% -5%
Aurora Cannabis 6.97% -20% Neptune Wellness Solutions 4.81% 32%
Canopy Growth 6.60% -21% CuraLeaf Holdings (Swap) 4.68% 11%
Corbus Pharmaceuticals 4.14% -13% Hexo Corp 4.52% -22%
OrganiGram Holdings 4.08% -10% Charlottes Web Holdings 4.36% 19%
Aphria Inc 3.70% -24% Canopy Growth 4.22% -21%
Green Organic Dutchman 3.56% -11% Cara Therapeutics 3.77% 7%
Hexo Corp 2.80% -22% Arena Pharmaceuticals 3.61% 6%

Sources: ETF.com, issuer websites; data as of July 31, 2019

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