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Dec. 31, 2019, 5:04 p.m. EST

Weed stocks rally on last day of a brutal year

Cannabis stocks in the U.S. and Canada rise after bloody year

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By Max A. Cherney


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Cannabis REIT Innovative Industrial Properties has gained 70% this year.

After a brutal year for cannabis investors, weed stocks on Tuesday rebounded in the final trading session of 2019.

Exchange-traded funds that track cannabis companies jumped more than 5% in Tuesday trading. The Horizons Marjiuana Life Sciences Index ETF /zigman2/quotes/208856346/delayed CA:HMMJ -1.47%  gained 7.1%, the ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -1.90%  rose 5.6% and the Cannabis ETF /zigman2/quotes/213173823/composite THCX -0.70%  rose 5.9% — reflecting gains in U.S. and Canadian weed companies.

Those gains could not come close to making up for the rest of what was a bloody year for pot stocks, however. Reflecting broad investor disappointment in the performances of Canadian and U.S. cannabis companies, the Horizons Marijuana Life Sciences Index ETF lost 43% of its value during the year, while the ETFMG Alternative Harvest ETF fell 35%. In the past three months, the Cannabis ETF, which launched midyear, fell 28%.

The sector went into the year with a valuation fattened by the promise of billions of dollars in weed sales in Canada and abroad. What occurred in 2019 was a disappointment to investors, who took dollar after dollar away from weed companies after problems that ranged from illegal activity to over-promised expectations from earnings.

Read: Cannabis stocks jump on hopes that Canadian move will curb black-market sales

What remains the world’s largest cannabis company by market capitalization, Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC +1.84% /zigman2/quotes/202205609/delayed CA:WEED -1.06%  rose 12.2% Tuesday. Earlier this month, Canopy Growth installed former Constellation Brands Inc. /zigman2/quotes/207737284/composite STZ -1.87%  Chief Financial Officer David Klein to the CEO job, replacing interim Chief Executive Mark Zekulin. The Corona beer maker has invested $4 billion in Canopy Growth and is the company’s largest shareholder.

Don’t miss: Aurora Cannabis stock slammed by executive departure and insiders selling

Canadian rival Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB -7.59%   /zigman2/quotes/203734337/delayed CA:ACB -7.18%  rose 13.1% in Tuesday trading, days after the company said it had asked former Chief Corporate Officer Cam Battley to step down from the job. Jefferies downgraded the stock to hold from buy after the news. “It is clear to us that the market is lacking conviction in Aurora, and this update will do little to help that,” Jefferies analyst Owen Bennett wrote in a note to clients as he lowered his stock price target to C$3.00 ($2.28) from C$7.00.

In a blog post Monday , former Aurora director of business development Brayden Sutton made the case that early entrepreneurs such as Canopy Growth’s charismatic former co-CEO Bruce Linton and salesmen like Battley are no longer relevant in cannabis.

“There’s no place for Cam’s [sic] or Bruce’s [sic] out there anymore — the market needs innovators and operators. It needs more students of Buffett and Graham. Hype paves the way but it fades out every time to make way for reality.”

Cronos Group Inc. /zigman2/quotes/206842762/composite CRON -2.99% /zigman2/quotes/202715342/delayed CA:CRON -4.30%  rose 15.9%, Aphria Inc. /zigman2/quotes/207425803/composite APHA +4.57%   /zigman2/quotes/205566616/delayed CA:APHA +1.46%  rose 10.4% and Tilray Inc. /zigman2/quotes/209129655/composite TLRY -0.76%  gained 9%.

Many of the largest U.S. weed producers posted gains as well. Curaleaf Holdings Inc. /zigman2/quotes/203485866/delayed CA:CURA +15.77%   /zigman2/quotes/205334348/delayed CURLF +9.28%  , one of the largest retailers, rose 6.6%, Green Thumb Industries Inc. /zigman2/quotes/206151134/delayed CA:GTII +1.06%   /zigman2/quotes/200716694/delayed GTBIF +0.25%  gained 3.9% and Cresco Labs Inc. /zigman2/quotes/200392306/delayed CRLBF +0.88%   /zigman2/quotes/205276242/delayed CA:CL 0.00%  posted a 3.8% gain. Acreage Holdings Inc. /zigman2/quotes/205165963/delayed ACRGF -0.77%  gained 8.6%. Cannabidiol, or CBD, product maker Charlotte’s Web Holdings Inc. /zigman2/quotes/212650907/delayed CA:CWEB +19.79%   /zigman2/quotes/205374221/delayed CWBHF +13.80%  gained 3.5%.

One significant exception to the downward trend of 2019 was Innovative Industrial Properties Inc. /zigman2/quotes/208038978/composite IIPR -3.20%  , the New York Stock Exchange-listed marijuana real-estate investment trust. Quietly posting modest profits over the year and paying out a dividend, IIPR stock has gained just over 70% since the beginning of the year. The company’s stock gained 3.3% in Tuesday’s session.

Embattled California-based retailer MedMen Enterprises Inc. /zigman2/quotes/206551904/delayed CA:MMEN -8.33%   /zigman2/quotes/201940908/delayed MMNFF -11.33%  rose 21% in Tuesday trading. Over the year, the company faced lawsuits from former employees, canceled an acquisition, announced significant layoffs as well as the departure of several high-profile executives.

Companies that service the cannabis industry but do not produce products derived from the plant also did well Tuesday. Distributor Greenlane Holdings Inc. /zigman2/quotes/211319667/composite GNLN +1.42%  rose 4% and package producer KushCo Holdings Inc. /zigman2/quotes/209165034/delayed KSHB -0.93%  rose 9.3%.

/zigman2/quotes/208856346/delayed
CA : Canada: Toronto
$ 7.39
-0.11 -1.47%
Volume: 644,451
Feb. 28, 2020 3:59p
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/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 13.91
-0.27 -1.90%
Volume: 1.80M
Feb. 28, 2020 8:00p
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/zigman2/quotes/213173823/composite
US : U.S.: NYSE Arca
$ 9.95
-0.07 -0.70%
Volume: 65,893
Feb. 28, 2020 8:00p
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/zigman2/quotes/200603886/composite
US : U.S.: NYSE
$ 18.78
+0.34 +1.84%
Volume: 6.79M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.57 billion
Rev. per Employee
$115,039
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/zigman2/quotes/202205609/delayed
CA : Canada: Toronto
$ 25.17
-0.27 -1.06%
Volume: 3.31M
Feb. 28, 2020 4:27p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.80 billion
Rev. per Employee
$150,142
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/zigman2/quotes/207737284/composite
US : U.S.: NYSE
$ 172.38
-3.28 -1.87%
Volume: 3.37M
Feb. 28, 2020 6:30p
P/E Ratio
43.42
Dividend Yield
1.74%
Market Cap
$32.63 billion
Rev. per Employee
$842,260
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/zigman2/quotes/210559470/composite
US : U.S.: NYSE
$ 1.34
-0.11 -7.59%
Volume: 26.47M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.57 billion
Rev. per Employee
$94,401
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/zigman2/quotes/203734337/delayed
CA : Canada: Toronto
$ 1.81
-0.14 -7.18%
Volume: 23.32M
Feb. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.12 billion
Rev. per Employee
$123,163
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/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 5.85
-0.18 -2.99%
Volume: 5.65M
Feb. 28, 2020 4:00p
P/E Ratio
6.66
Dividend Yield
N/A
Market Cap
$2.01 billion
Rev. per Employee
$55,248
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/zigman2/quotes/202715342/delayed
CA : Canada: Toronto
$ 7.79
-0.35 -4.30%
Volume: 2.03M
Feb. 28, 2020 4:00p
P/E Ratio
6.68
Dividend Yield
N/A
Market Cap
$2.68 billion
Rev. per Employee
$70,780
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/zigman2/quotes/207425803/composite
US : U.S.: NYSE
$ 3.66
+0.16 +4.57%
Volume: 6.97M
Feb. 28, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$925.72 million
Rev. per Employee
$147,410
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/zigman2/quotes/205566616/delayed
CA : Canada: Toronto
$ 4.86
+0.07 +1.46%
Volume: 5.60M
Feb. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.23 billion
Rev. per Employee
$190,843
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/zigman2/quotes/209129655/composite
US : U.S.: Nasdaq
$ 14.43
-0.11 -0.76%
Volume: 3.60M
Feb. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.44 billion
Rev. per Employee
$62,689
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/zigman2/quotes/203485866/delayed
CA : Canadian Securities Exchange
$ 7.12
+0.97 +15.77%
Volume: 483,476
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.39 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205334348/delayed
US : U.S.: OTC
$ 5.30
+0.45 +9.28%
Volume: 890,774
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.52 billion
Rev. per Employee
N/A
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/zigman2/quotes/206151134/delayed
CA : Canadian Securities Exchange
$ 9.50
+0.10 +1.06%
Volume: 348,555
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.96 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200716694/delayed
US : U.S.: OTC
$ 7.06
+0.02 +0.25%
Volume: 529,310
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.46 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200392306/delayed
US : U.S.: OTC
$ 4.60
+0.04 +0.88%
Volume: 829,555
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$562.99 million
Rev. per Employee
N/A
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/zigman2/quotes/205276242/delayed
CA : Canadian Securities Exchange
$ 6.20
0.00 0.00%
Volume: 451,803
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$758.81 million
Rev. per Employee
N/A
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/zigman2/quotes/205165963/delayed
US : U.S.: OTC
$ 3.98
-0.03 -0.77%
Volume: 273,853
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$273.35 million
Rev. per Employee
N/A
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/zigman2/quotes/212650907/delayed
CA : Canada: Toronto
$ 8.17
+1.35 +19.79%
Volume: 682,660
Feb. 28, 2020 4:10p
P/E Ratio
36.02
Dividend Yield
N/A
Market Cap
$802.03 million
Rev. per Employee
$298,445
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/zigman2/quotes/205374221/delayed
US : U.S.: OTC
$ 5.69
+0.69 +13.80%
Volume: 794,991
Feb. 28, 2020 3:59p
P/E Ratio
33.22
Dividend Yield
N/A
Market Cap
$558.57 million
Rev. per Employee
$229,925
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/zigman2/quotes/208038978/composite
US : U.S.: NYSE
$ 91.94
-3.04 -3.20%
Volume: 939,728
Feb. 28, 2020 6:30p
P/E Ratio
46.79
Dividend Yield
3.08%
Market Cap
$1.25 billion
Rev. per Employee
$2.46M
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/zigman2/quotes/206551904/delayed
CA : Canadian Securities Exchange
$ 0.33
-0.03 -8.33%
Volume: 1.78M
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$54.96 million
Rev. per Employee
$63,165
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/zigman2/quotes/201940908/delayed
US : U.S.: OTC
$ 0.24
-0.03 -11.33%
Volume: 3.56M
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$40.34 million
Rev. per Employee
$49,729
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/zigman2/quotes/211319667/composite
US : U.S.: Nasdaq
$ 2.14
+0.03 +1.42%
Volume: 156,017
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$21.40 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/209165034/delayed
US : U.S.: OTC
$ 1.07
-0.01 -0.93%
Volume: 1.43M
Feb. 28, 2020 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$128.27 million
Rev. per Employee
$339,343
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Max A. Cherney is a MarketWatch reporter based in San Francisco. Follow him on Twitter @chernandburn.

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