Cannabis stock report: a less than stellar week for investors

One of the hardest hit companies was Organigram Holdings, whereas Aphria shareholders fared much better

Organigram Holdings quarterly loss

Organigram Holdings employs 433 workers at its indoor facility in Moncton. Photo by Organigram Holdings.

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A Moncton-based licensed producer had perhaps the toughest week among Canadian cannabis companies.

On Friday (July 3), Organigram Holdings Inc. announced that it was issuing permanent layoffs to about 220 staff, one-quarter of its workforce.

That sent the stock sinking by 7.3 percent, closing at $2.03 on the Toronto Stock Exchange. Over five days, the price of Organigram shares fell 10.6 percent, leaving the company with a market capitalization of $394.1 million.

Organigram admitted on Friday that due to market conditions, it will cultivate less cannabis than its Moncton facility is capable of producing.

In other news from the world of weed, Aurora Cannabis Inc. officially parted ways with two of its founders this week: former CEO and board member Terry Booth and former president Steve Dobler.

That didn’t offer any bump to the share price of the Edmonton-based licensed producer.

Aurora stock closed the week at $16.45 on the Toronto Stock Exchange, down 3.5 percent from the opening price on June 29. Its market capitalization stands at $1.86 billion.

It was a more dreadful week for investors in another large Canadian licensed producer, Nanaimo-based Tilray. Its share price fell 12.6 percent in four days of trading on NASDAQ, as U.S. markets were closed on Friday.

Tilray stock is at US$6.96, leaving the company with a market value of US$869 million.

Back on March 10, Tilray shares were flying higher, opening at US$8.34.

Later that day, the Rosen Law Firm announced a class-action lawsuit against Tilray and its CEO Brendan Kennedy, and chief financial officer and treasurer Mark Castaneda in U.S. District Court in the Eastern District of New York.

According to the law firm, the class consists of shareholders other than the defendants who acquired Tilray securities between January 15, 2019, and March 2, 2020.

The lawsuit alleges that the defendants “made materially false and misleading statements”, including overstating the advantages of its 2019 marketing and revenue-sharing agreement with Authentic Brands Group.

None of the allegations have been proven in court but Tilray’s share price remain in the doldrums.

Whereas Tilray’s market capitalization has declined since the class-action lawsuit, the value of Cronos Group Inc. shares have risen markedly since it was named in a class-action lawsuit filed by the same firm.

Two days after the court action was launched against Tilray, the Rosen Law Firm announced that Cronos Group was being sued for conduct between May 9, 2019, and March 2, 2020.

On March 12, Cronos Group shares opened at $6.68 on the Toronto Stock Exchange.

On July 3, the Toronto-based licensed producer’s shares closed at $8.29. That was up 1.2 percent on the week, boosting its market capitalization to $2.89 billion.

The complaint filed against Cronos Group in U.S. District Court in the Eastern District of New York alleges that the company “made false and/or misleading statements and/or failed to disclose that…Cronos had engaged in significant transactions for which its revenue recognition was inappropriate”.

None of these allegations against Cronos Group have been proven in court.

The share price of Canada’s most valuable cannabis company, Canopy Growth Corporation, has not seen a great deal of movement over the past month.

This week, the Smith Falls, Ontario–based licensed producer’s stock rose 2.1 percent to close at $22.08 in Toronto. Canopy Growth’s market capitalization is $8.17 billion.

When CannCentral reported on June 25 that Canopy Growth and New York–based Acreage Holdings Inc. had updated their agreement for a potential takeover, the Canadian company’s share price was trading at $22.50. That was far below the $61.15 opening price for Canopy Growth on May 23, 2019, when the share-swap deal was last amended.

This week, the Motley Fool website estimated that the value of the transaction is now about $843 million, based on stock prices. It was originally announced as a $3.4-billion acquisition.

Curaleaf Holdings Inc. also recently amended its agreement to purchase GR Companies Inc., a.k.a. Grassroots, in June.

On July 2, Curaleaf announced that by August, it will be distributing its Select brands in four more states: Main, Massachusetts, Ohio, and Florida.

The Wakefield, Massachusetts–based cannabis company’s shares closed at $7.98 on the Canadian Securities Exchange on July 3, up 1.5 percent on the week. Curaleaf’s market value is $3.5 billion.

One of the winners this week was Leamington, Ontario–based Aphria Inc. Its share price jumped 5.96 percent on the week to close at $5.87 in Toronto. The company’s market capitalization is $1.68 billion.

This rise in the share price followed a June 25 announcement that Aphria had settled a dispute with Emblem Cannabis Corporation and its parent, Aleafia Health Inc., regarding a wholesale cannabis agreement.

Aleafia Health shareholders, however, didn’t fare quite as well this week. The company’s stock rose a penny on the week to close at $0.50 on the TSX Venture Exchange.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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