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
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“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.

 

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