Marijuana stocks suffered broad and sharp losses Monday, and were headed for their worst five-session skid in over eight months as full-legalization in Canada appears to have taken the shine off the sector despite early indications of strong demand.
The ETFMG Alternative Harvest exchange-traded fund MJ, -9.36% tumbled 9.4% by the close, with 28 of 37 components losing ground and 16 of the decliners shedding more than 5%. The ETF has lost roughly 20% amid a five-session losing streak, the biggest such loss since the ETF’s inception on Dec. 3, 2015. Canada-traded Horizons Marijuana Life Sciences Index ETF HMMJ, -11.60% also fared poorly, plummeting 11.6%, the largest drop in the fund’s history.
The sector continues to lose ground since adult recreational marijuana use became fully legal in Canada on Oct. 17. In the two months leading up to full-legalization, the cannabis ETF had soared 46%.
Don’t miss: Cannabis is now legal in Canada, but pot companies expect a rocky start.
Among the more-active weed stocks Monday, Aurora Cannabis Inc. ACBFF, -12.80% ACB, -12.22% shed 12.8%, a day before the Vancouver-based medical cannabis company’s stock was slated to begin trading on the New York Stock Exchange, under the ticker symbol “ACB.”
Shares of Canopy Growth Corp. CGC, -11.21% WEED, -11.16% slumped 11%, Cronos Group Inc. CRON, -12.26% dropped 12%, New Age Beverages Corp. NBEV, -16.27% plunged 16% and Tilray Inc. TLRY, -15.62% lost 16%.
Corona beer maker Constellation Brands Inc. STZ, -1.69% which made a splash when it boosted its stake in Canopy Growth by $4 billion in August, saw its shares lose 1.7%.
India Globalization Capital Inc.’s stock IGC, -16.04% plummeted 16%. It has lost roughly half its value in the past five days, and has shed 80% since closing at an eight-year high of $13 on Oct. 2.
Also read: All the potential red flags for investors in IGC, the pot stock that jumped 1,000% in three months.
Shares of Net Element Inc. NETE, +53.37% were a rare highlight for bulls, as they shot up 53% on heavy volume after the Florida-based financial technology company said its Unified Payments subsidiary launched a “secure and compliant” payment processing offering for the legal cannabis industry. Trading volume spiked to over 9 million shares, compared with the full-day average of about 81,000 shares.
The broad sector selloff comes despite early indications of strong demand since full-legalization.
“While it was difficult for provinces and experts to predict just what the demand for cannabis would be once legalized, the actual demand far exceeds any reasonable expectations,” said Quebec-based Hexo Corp. in a statement. The company added that it has delivered on all orders since full legalization and has also replenished its stock, but the shares HEXO, -13.26% HYYDF, -13.11% slid 13% on Monday.
Elsewhere, MedMen Enterprises Inc. shares MMNFF, -12.06% lost 12% after the full-service cannabis company said it acquired a dispensary in San Jose, Calif., for an undisclosed sum. The news follows the company’s announcement earlier this month of a $682 million buyout of PharmCann, to mark the biggest-ever deal for a U.S.-based marijuana company.
“MedMen continues to expand its market share in California, the largest and most advanced cannabis market in the world,” said Chief Executive Adam Bierman. “Our next phase of growth will be focused on going deeper in the markets where we already have a presence and brand equity.”
Shares of Green Organic Dutchman Holdings Ltd. TGODF, -16.45% declined 16%, Aleafia Health Inc. ALEAF, -19.03% gave up 19% and Aphria Inc. APHQF, -13.70% fell 14%.
Meanwhile, the marijuana ETF was still up 24.6% over the past three months, while the S&P 500 index SPX, -0.43% has slipped 1.4%.
Check out: MarketWatch’s comprehensive coverage of the cannabis sector, including profiles of a number of key players
