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Why Most Marijuana Stocks Tanked This Week

By Eric Volkman – Aug 20, 2021 at 5:19PM

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It's more about what isn't happening in the sector than what actually occurred.

What happened

Most publicly traded weed companies saw their share prices wilt this week. Among the more significant decliners were Charlotte's Web Holdings (CWBHF 2.65%) and Organigram (OGI 3.00%), both of which fell by around 20% across the five-day stretch. Up-and-comers Flora Growth (FLGC -11.54%) and IM Cannabis (IMCC -5.18%) took even harder hits, with both declining at a roughly 26% clip. 

So what

There weren't any all-encompassing and powerful negative developments in marijuana; rather, last week seemed to be more of a "no news is bad news" situation in the world's potentially most important weed market. 

Gavel with marijuana atop an American flag.

Image source: Getty Images.

Earlier this year, it seemed that great progress was being made on the U.S. legalization/decriminalization front. Several states flipped the switch on either medical or recreational cannabis, and a new decriminalization bill was introduced in the Senate.

But almost no legislative progress has been made since then, and the clock is ticking for the cannabis sector. Many weed companies are continuing to burn cash. Time isn't on their side, and they could really use the boost that greater cannabis law liberalization will bring. 

Now what

Other factors are affecting this particular set of stocks. At the end of last week, Charlotte's Web was hit by a recommendation downgrade from Piper Sandler, from overweight (read:buy) to neutral. Flora Growth, meanwhile, posted half-year results which showed encouraging growth yet revealed the company was well in the red on the bottom line.

All in all, though, this week appeared to prove that the cannabis industry's fortunes are still firmly tied to marijuana legalization...or the lack thereof.

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

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Stocks Mentioned

Charlotte's Web Stock Quote
Charlotte's Web
$0.60 (2.65%) $0.02
OrganiGram Stock Quote
$1.03 (3.00%) $0.03
IM Cannabis Corp. Stock Quote
IM Cannabis Corp.
$1.81 (-5.18%) $0.10
Flora Growth Corp. Stock Quote
Flora Growth Corp.
$0.46 (-11.54%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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