During the first quarter, cannabis stocks were practically unstoppable. The Horizons Marijuana Life Sciences ETF, the first-ever cannabis exchange-traded fund to hit the market, rose more than 50%, and 14 popular pot stocks scorched higher by more than 70%.
However, the past four months have not been pretty, with marijuana stocks certainly losing their buzz. In July, the Horizons Marijuana Life Sciences ETF shed almost 12% of its value, and of the 58 cannabis stocks that Yours Truly follows, 49 ended the month lower. Further, 38 of these 49 decliners ended the month of July with a double-digit percentage loss. Yuck!
But in spite of this negativity, there were a small number of bright spots. Below, you'll see the nine cannabis stocks that rose in July, listed in descending order, based on their monthly gain.
1. Neptune Wellness Solutions: Up 31.5%
The top gainer for July -- and one of the hottest pot stocks this year -- was extraction services provider Neptune Wellness Solutions (NEPT 6.08%). The biggest catalyst last month looks to be its $41 million private placement, which the company plans to use to boost its extraction capacity and make acquisitions. The press release notes that Neptune has 200,000 kilos of extraction already booked for 2020 and 2021, so it's aiming to capitalize on growers' desire to extract cannabidiol (CBD), the nonpsychoactive cannabinoid that doesn't get users high, from cannabis and hemp.
2. Charlotte's Web Holdings: Up 20.5%
Leading CBD stock Charlotte's Web (CWBHF 4.84%), although volatile to begin with, had gains that looked to be tied to the company signing its largest distribution deal in history with Kroger. Under the terms of the deal, Charlotte's Web will supply 1,350 Kroger family stores in 22 states with a variety of its CBD products. This deal pushed Charlotte's Web's retail presence to more than 8,000 doors, which is more than double the 3,680 retail doors it began the year with.
3. Scotts Miracle-Gro: Up 13.9%
One thing you'll note is that a third of the cannabis risers in July are ancillary players. Scotts Miracle-Gro (SMG 1.59%) benefited from a strong third-quarter earnings report on July 31, as well as having only a small portion of its sales coming from cannabis. This leads to more predictability in its sales and profitability compared to pure-play pot stocks. For the third quarter, Scotts Miracle-Gro saw subsidiary Hawthorne Gardening's sales climb 138%, although the acquisition of Sunlight Supply last year aided its results. Ultimately, strong cannabis-related revenue from Hawthorne helped Scotts raise its full-year outlook yet again.
4. Cara Therapeutics: Up 11.3%
Another ancillary player that received a nice boost in July was clinical-stage drug developer Cara Therapeutics (CARA 2.54%). If not for a $126.5 million share offering on July 24 that Wall Street wasn't thrilled with, Cara had a shot at being the top-performing weed stock in July. As for the catalysts that pushed Cara higher, they look to be the company's disassociation with supply-side issues in Canada and tax issues in the U.S. (after all, this is a drug developer), as well as the initiation of a mid-stage trial for lead experimental drug Korsuva in patients with atopic dermatitis.
5. Curaleaf Holdings: Up 10.1%
Now, U.S.-focused, multistate dispensary operator Curaleaf Holdings (CURLF 0.34%) had a wild July. It surged higher after announcing an $875 million deal to buy privately held Grassroots -- a deal that'll push it into 19 states, and give it the second-most retail store licenses at 131 and the most operational stores (68) on a pro forma basis. Then again, Curaleaf was also hit with a warning letter from the U.S. Food and Drug Administration over claims for some of its CBD products and, subsequently, lost its distribution deal with CVS Health in 800 stores. All that netted Curaleaf a 10% gain for the month of July.
6. Auxly Cannabis Group: Up 9.7%
Recently a more frequent visitor to the loss column, cannabis royalty company and grower Auxly Cannabis Group (CBWTF 10.69%) gained nearly double digits in July after announcing an investment from big tobacco. More specifically, Auxly is getting 123 million Canadian dollars from Imperial Brands, the company behind the Kool and Winston cigarette brands, via a convertible note, translating into a 19.9% stake in Auxly. This gives Auxly cash that it can immediately put to work, as well as offers Imperial Brands the option of exercising its notes or simply receiving cash back at 4% annual interest for its convertible in the future.
7. Shopify: Up 5.9%
The third and final ancillary stock that rose in July was Shopify (SHOP 0.20%). Unlike the companies listed before it, Shopify didn't have any specific news event that can be pinpointed for its nearly 6% gain. However, Shopify doesn't generate a significant portion of its revenue from cannabis companies and provinces using its e-commerce platform. Thus, despite supply-side issues in Canada, Shopify's core subscription growth outside of cannabis is likely fueling much of the optimism surrounding this stock.
8. MediPharm Labs: Up 5.1%
MediPharm Labs (MEDIF -4.54%), yet another extraction services provider, suffered through an early month swoon only to rebound in a big way. The spark looks to have come from a mid-month operational update that noted MediPharm was production cannabinoid concentrate of 75 million milligrams a week, and was on track to eventually boost its annual capacity to more than 500,000 kilos per year. Once again, with CBD being all the rage, extraction-service providers like MediPharm Labs find themselves in the right place, at the right time.
9. Planet 13 Holdings: Up 2.5%
Finally, niche dispensary operator Planet 13 Holdings (PLNH.F 0.19%), which runs the largest cannabis store in the U.S. in Las Vegas, rose ever so slightly. The only major news event for Planet 13 in July was the release of its June store traffic, which actually showed a modest decline in average customers per day and ticket, which the company blamed on intermittent credit card machine issues that are now fixed. The reason Planet 13 likely rose is its upfront transparency, unique business model that focuses on the customer experience, and valuation of less than three times next year's sales.