Marijuana stocks are quite an up-and-down asset class, with accent on the "down." That was their story on Tuesday, with many of the major titles falling in price.
Canadian companies Canopy Growth (CGC 4.11%), Sundial Growers (SNDL 0.69%), and Hexo (HEXO) declined by nearly 7%, 9%, and 7%, respectively. Their American peers Curaleaf Holdings (CURLF 6.08%) and cannabidiol (CBD) products specialist Charlotte's Web Holdings (CWBHF -2.62%), meanwhile, tumbled by a respective 7% and 5%.
For the most part, this is basically a sell-off within a volatile, nervous market. The situation in Ukraine has a great many investors on edge, and when investors are on edge, they tend to trade out of more speculative assets. A prime example is marijuana stocks, which have been socked numerous times in situations like this.
That's compounded by the latest happenings at ever-struggling Hexo. On Tuesday morning, the company announced that it has entered into a transition agreement to "refresh" (i.e., replace) its board of directors, bowing to pressure from an activist shareholder. This arrangement is effective immediately, and the new, seven-member board will stand for election next month.
That investor, Kaos Capital, bought a stake of around 3% of Hexo and began agitating for change earlier this month. In a press release, Kaos Capital said that it planned to nominate new directors for the company "with a goal of replacing the majority of the currently entrenched legacy Hexo board members and turning around the underachieving company's disappointing performance."
A hesitant market and a full-scale board overhaul at a name producer makes for a toxic combination for pot stocks. Barring any sudden and positive news about the industry, we can expect more bear days than bull rushes for the top weedies in the days ahead.