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Buds & Duds: Cannabis stocks sink as Cronos, Tilray feel the effects of oversupply in Canada

Nabis Holdings and BevCanna gained on Wednesday after both companies made moves to strengthen businesses

TransCanna -
Also moving was TransCanna on a new acquisition in California

Cannabis stocks continued to lose ground on Wednesday across North American markets.

The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada slipped 1.1% at 123.9 points. Elsewhere, the Horizons Marijuana Life Sciences Index ETF fell 1.5% to C$9.95, while the OTCQX Cannabis Index sank 1.8% at 447.3 points.

Canadian securities regulators are preparing to enforce stricter guidelines for the cannabis industry after finding a series of inadequacies in the way companies disclose conflicts of interest, particularly when it comes to cross-ownership in mergers and acquisitions, The Financial Post reported.

In some cases regulators discovered that the buyer or seller in an M&A transaction had an undisclosed financial interest in the other company, according to the newspaper’s Barbara Shecter.

Buds

TransCanna Holdings Inc (CSE:TCAN) saw big gains on Wednesday after closing its acquisition of Lyfted, a vertical cannabis company in California, increasing its foothold in the most populous US state.

Vancouver-based TransCanna paid US$550,000 and issued nearly 2.7 million shares at C$0.80 to Lyfted shareholders.

Shares of TransCanna gained 11% in Canada to stand at $0.81.

Nabis Holdings Inc (CSE:NAB) (OTCMKTS:NABIF) was also higher in Canada as its shares began trading on the OTCQB venture market, giving the company increased exposure to a US investor base.

Nabis shares traded 6.3% higher on the Canadian Securities Exchange at C$0.09 and were trading at US$0.07 on OTC markets by midmorning Wednesday.

BevCanna Enterprises Inc (CSE:BEV) (OTCMKTS:BVNNF) also gained 1.1% to hit C$0.46 in Canada after announcing plans to acquire cold-pressed juice company Little West Holdings LLC.

Duds

Unsurprisingly, the two major companies reporting results after yesterday’s market close led Wednesday’s duds.

Cronos Group Inc (TSE:CRON) (NASDAQ:CRON) sank 4.8% in Toronto at C$9.86 on Wednesday after it fell short of revenue estimates for its third quarter, coming in at C$12.7 million compared to analyst targets of $14.1 million.

The Canadian producer felt the pain of a cannabis market suffering from oversupply, with its revenue per gram of cannabis sold falling to $3.75.

In the US, Cronos shares tumbled 4.5% to trade at US$7.48.

Also reporting after the bell was Tilray Inc (NASDAQ:TLRY), which lost 1% at US$21.35 following a wider-than-expected third quarter loss.

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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