Cannabis stock prices have fallen hard in recent years as the concerns over this industry continue. AdvisorShares Pure US Cannabis (MSOS), a stock in the ETF, has fallen by nearly 14% since its peak this year.
Similarly, Amplify’s Seymour cannabis ETF and ETFMG Alternative Harvest ETF have both fallen by over 37% since their year-to date high. The price movement of cannabis stocks has erased the majority of gains made in recent months.
Tilray Brands’ (TLRY), stock has dropped by more than 26% in the past year, and by 42% since its year-to date high. The company that traded at $67 in 2020 is now trading for $1.70, a drop from its previous price of over $67,000.
Canopy Growth’s share price also fell from $565 to $5.29 in 2021, while Curaleaf Holdings’ (CURLF), which had a high record of $18,34 has fallen to just $2.75. Verano Holdings, Cronos Group and Cresco Labs have all seen their share prices plummet.
US Cannabis Reclassification will take Time
The rise in regulatory clarity has led to a sharp increase in cannabis stocks.
The Justice Department and President Joe Biden reclassified cannabis in May to make it a safer drug, while still recognizing its medicinal benefits.
This was a significant step, and came just a few short years after the Supreme Court had ruled states were allowed to make cannabis legal.
The Drug Enforcement Administration has retained its classification. This classification has had the unintended effect of preventing many banks from offering services to cannabis businesses.
It is also more difficult to transport products across state borders.
Biden’s announcement was good for this industry. However, the next step has caused these stocks to plummet.
The Office of Management of Budget will review the proposal after his announcement, followed by a long public comment process. It will then be sent to a judge in the administration, which means that this will take time.
The process is dependent on the outcome of the election in November. There is a high chance that Donald Trump will stop the process if he wins.
The cannabis banking regulations are still in place
The cannabis stocks have also risen due to the statement made by Chuck Schumer. He is the Senate Majority leader and has committed to introducing a marijuana banking bill.
He hasn’t done so yet and it is likely that he won’t, since November will be the date of elections.
Market participants realize that there’s no chance Mike Johnson will be able to bring the bill through the House of Representatives, even if the Senate passes it.
A bill of this nature would only pass if both the Senate and House of Representatives were fully under the control of Democrats, and if President Obama was a Democrat.
Tilray Brands results, Curaleaf and Canopy growth
Three cannabis companies have also fallen because their financial performance is relatively poor, which has led to significant concerns regarding the industry.
Tilray Brands’ revenue grew by 25 percent to $229 millions in the last quarter, according to its most recent financial report. The growth was mainly due to its acquisitions.
The company bought several AB InBev beer brands last year and four Molson Coors breweries this month. The company aims to diversify its business by acquiring alcoholic and cannabis beverages.
The company’s cannabis sales increased by 12%, to $71 Million. This was due to its purchase of HEXO & Truss. Tilray Brands’ net loss for the year was over $220 millions.
Curaleaf reported net revenue of $343m in the third quarter. This is a 2 percent increase over the previous year. The company also suffered a huge loss of $48.9m. In the six-month period ending June, revenues rose by 2 percent to $681 millions while losses were $97.2 millions.
Canopy Growth showed that cannabis sales were also slowing down. The company’s net revenues were $66.2m, down 135 from 2023. The net loss for the company was $129 millions, while free cash flow came in at minus $55.7.
These results show that cannabis is experiencing a tough time, but I don’t think that regulation has anything to do with it. Also, I do not believe that the cannabis banking legislation and reclassification will supercharge this sector. One, cannabis products are easily available in Canada and the United States.
There are challenges in the industry, such as stiff competition and a lower demand than analysts expected.
The post Why Tilray Brands (Canopy Growth), Curaleaf, and Tilray Brands stocks are down may change as new information is revealed.
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