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Why Shares of Aurora Cannabis, OrganiGram, and Charlotte's Web All Declined Today

By Rich Smith – Updated Oct 14, 2020 at 12:53PM

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Only one of these declines makes sense.

What happened

Marijuana stocks dropped in midday trading Wednesday. As of noon EDT, shares of Aurora Cannabis (ACB -6.20%) were trading 4% lower, OrganiGram Holdings (OGI -1.42%) was down 4.3%, and Charlotte's Web (CWBHF -4.92%) was off 4%. And Charlotte's Web may be to blame for it all.

Wilted marijuana plants

Weed stocks were wilting today. Image source: Getty Images.

So what

In a veritable tic-tac-toe of bad news, three analysts in a row have cut their price targets on Charlotte's Web, a producer of hemp-derived cannabidiol (CBD) wellness products. There are few details on the reasons for the cuts in price targets. But ratings-watcher StreetInsider.com confirms that since late Tuesday afternoon, no fewer than three separate name-brand analysts -- Cantor Fitzgerald, Roth Capital Partners, and Piper Sandler (NYSE: PIPR) -- have cut their price targets for Charlotte's Web stock.

Although CBD is the more legal byproduct of the marijuana industry, the pessimism about Charlotte's Web appears to be bleeding over into the more-traditional cannabis companies Aurora and OrganiGram, even though nobody seems to be downgrading them (yet).

Now what

Does this make sense with one political party promising to decriminalize marijuana and clear the records of those convicted of marijuana-related offenses?

Perhaps in the case of Charlotte's Web, it actually does. If you think of hemp-derived CBD wellness products as the legal alternative to the products that consumers nationwide really want to buy (weed), then the prospect of legal marijuana being widely available actually could be bad news for Charlotte's Web's business.

But it would almost certainly be good news for those who want to invest in honest-to-goodness marijuana stocks like Aurora Cannabis and OrganiGram Holdings. That's why today, although the declining price of Charlotte's Web stock makes sense, there's no really good reason to be selling Aurora Cannabis or OrganiGram.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends OrganiGram Holdings. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.

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