In 2019, the bubble well-and-truly burst for pot stocks, sending many investors running for the hills. Now, it looks like we’re seeing the cannabis industry rally back up.
As we’ve covered extensively, 2019 was not a kind year for cannabis investors, and by the time the COVID-19 pandemic became widespread in March 2020, the American Cannabis Index was valued at just a tenth of its value in the previous year.
While COVID-19 was itself largely responsible for what is now being called the “March 2020 crash,” the cannabis industry was already dealing with internal issues that had sullied investor confidence.
Overpriced valuations, a persistent black market, cash hemorrhaging, and a lack of available funding all converged to bring the cannabis industry to its knees.
In response to these issues and the COVID-19 crisis, many companies began to cut costs wherever possible. Canopy Growth laid off over 1,000 staff, and ceased operations across three continents, OrganiGram cut 45% of its workforce and Aurora cut hundreds of jobs, including 25% of its corporate positions in February.
But now, as we enter the final quarter of 2020, it’s beginning to look like pot stocks are beginning to bounce back.
As shown above, the American Cannabis Index on New Cannabis Ventures has increased by over 260% since mid-March. Additionally, the ETF ETFMG Alternative Harvest (MJ) has climbed 50% since that same period. While these current gains felt by the industry admittedly pale compared to its 2018 bubble-heights, we may be seeing a more realistic evaluation of the cannabis industry’s trajectory and potential.
And it looks as though portfolio managers are beginning to think the …