Please ensure Javascript is enabled for purposes of website accessibility

Why Marijuana Stocks Aurora Cannabis, HEXO, and Charlotte's Web Went Up in Smoke Today

By Eric Volkman – Updated Oct 15, 2020 at 1:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These companies were not to blame for their stock price declines.

What happened

Last week, Kamala Harris pledged that if elected, the Biden administration would decriminalize marijuana. Many weed stocks popped on that pronouncement.

That was then; this is now. Marijuana stocks had an awful Thursday. Bellwether Aurora Cannabis (ACB 4.83%) declined by 5.5% on the day, HEXO (HEXO -0.74%) slipped 3.5%, and cannabidiol (CBD) specialist Charlotte's Web Holdings (CWBHF -1.48%) won that three-horse race to the bottom with a 7.5% slide.

Hand holding a burning marijuana cigarette.

Image source: Getty Images.

So what

The bad guy in this story is their peer, Canadian producer and supplier Aphria (APHA). Before market open, Aphria published its results for the first quarter of fiscal 2021.

As is habitual in corporate marijuana, Aphria booked a net loss, although that was actually a bit narrower than analyst estimates.

The problem was revenue, which fell short of projections and was down on a sequential basis. Aphria said the culprit was the coronavirus pandemic, which dampened the market for any unrelated health need, such as medical marijuana. This had a deleterious effect on its distribution revenue.

Now what

Aphria's poor showing is about the 50th stark illustration of the woes of the cannabis industry. It remains burdened by many albatrosses, including the strength of competing black-market product, supply challenges, and regulatory inconsistencies -- even in 100% legalized Canada, the home not only of Aphria, but also Aurora and HEXO (Charlotte's Web is based in Colorado).

Marijuana stock investors are a hardy bunch, but many find these frequent reminders of struggle dismaying. Their patience might be wearing thin.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Charlotte's Web and HEXO. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.