Australia’s cannabis stocks are struggling to recover after the market correction in early February.

Almost all of the 21 ASX-listed pot stocks monitored by Stockhead are still down from their January highs.

Only Atlas Pearls (ASX:ATP), which has a cannabis joint venture in Tasmania, Zelda Therapeutics (ASX:ZLD) and CannPal (ASX:CP1) are trading above their February 1 share prices.

It’s the same story in Canada’s Marijuana Index of 24 cannabis-related stocks, which is down around 30 per cent since the start of the year.

The dip has been partly caused by news of a delay in the legislation of recreational cannabis use in Canada, which has been driving Canadian — and Australian — pot stock values.

In the local market, John Athanasiou, founder and CEO of Red Leaf Securities, says reputational damage caused by recent scandals at tech companies Get Swift (ASX:GSW), Buddy (ASX:BUD) and Big Un (ASX:BIG) is also having an impact in other small cap sectors such as cannabis.

The Canadian Marijuana Index of 24 pot stocks has not recovered since the market correction. Source: marijuanaindex.com
The Canadian Marijuana Index of 24 pot stocks has not recovered since the market correction. Source: marijuanaindex.com

“There’s concern in the small caps space given what’s happened in other small cap IT companies, it might be prevalent in other sectors as well — like cannabis,” he told Stockhead.

“There are also a few cannabis stocks with internal boardroom issues, which isn’t helping.”

The Hydroponics Company (ASX:THC) and eSense Lab (ASX:ESE) are both dealing with such issues, while others like Stemcell United (ASX:SCU) have struggled to sell capital raisings to a skeptical market.

However, growing demand for cannabis — especially in North America — is expected to underpin growth among cannabis plays later this year. The legalisation of recreational pot in Canada — now expected to go ahead after August — and a similar rollout in US States will drive demand.

ASX Code Name Change since Feb 1 Price Feb 22 Price Feb 1 52wk High 52wk Low Market Cap
AEB ALGAE.TEC -0.08 0.033 0.036 0.07 0.018 25224606
ATP ATLAS PEARLS 0.03 0.031 0.03 0.042 0.025 14119768
AC8 AUSCANN -0.11 1.46 1.64
BDA BOD AUSTRALIA -0.18 0.45 0.55 0.72 0.09 24654080
BOT BOTANIX PHARMACEUTICALS -0.2 0.1125 0.14 0.21 0.039 75011760
CAN CANN GROUP -0.06 2.9 3.1
CP1 CANNPAL ANIMAL THERAPEUTICS 0.21 0.26 0.215 0.31 0.155 23281250
CHP CHAPMANS -0.38 0.01 0.016 0.033 0.004 14575000
CPH CRESO PHARMA -0.07 0.87 0.935 1.65 0.275 95817352
EXL ELIXINOL GLOBAL -0.09 1.39 1.535 1.995 1.235 136894960
ESE ESENSE-LAB -0.2 0.185 0.23 0.57 0.145 14118442
EVE EVE INVESTMENTS -0.21 0.011 0.014 0.033 0.0035 24127470
THC THE HYDROPONICS CO -0.04 0.79 0.825 1.15 0.19 91793352
LSH LIFESPOT HEALTH -0.18 0.135 0.165 0.36 0.11 10116923
MDC MEDLAB CLINICAL -0.16 0.76 0.9 1.2 0.5 165377232
MXC MGC PHARMACEUTICALS -0.09 0.105 0.115 0.125 0.038 118783064
MMJ MMJ PHYTOTECH -0.1 0.455 0.505 0.835 0.265 97323296
QBL QUEENSLAND BAUXITE -0.08 0.054 0.059 0.115 0.007 80315824
RGI ROTO-GRO INTERNATIONAL -0.19 0.435 0.54 0.705 0.185 37703924
SCU STEMCELL UNITED -0.19 0.035 0.043 0.9765 0.0117 16264281
ZLD ZELDA THERAPEUTICS 0.13 0.135 0.12 0.16 0.031 105747872

“The potential move in Canada to legalise recreational use in 2018 should provide strong catalysts in the sector as a whole, leading into year’s end,” says Niv Dagan, Executive Director at PEAK Asset Management.

Investors should focus on “cannabis stocks that are undervalued relative to peers”, he says.