Shares of Canopy Growth (NASDAQ:) (TSX:) took a bit of a hit Monday after the cannabis grower was downgraded by a single analyst.
Shares of the Ontario, Canada-based company fell about 3.75% in quiet trading the day before regaining some of that slippage to close at $9.45, down 1.77%. The downturn was reportedly in response to a rating downgrade by Piper Sandler, which lowered its price target from $4 a share to $7.
Earlier this month, Canopy was hailed when it announced it would sell a European subsidiary known as C3 Cannabinoid Compound Company GmbH. The German-based company, which develops and manufactures pharmaceutical products, will be sold to Dermapharm Holding (DE:), which is also headquartered in the city of Grünwald.
The deal means Canopy will accept a cash payment of approximately €80 million (US$90.62 million) with additional payments that could reach €46.2 million (US$52.34 million) if C3 meets certain performance targets .
The sale is widely seen as a move by Canopy to consolidate its efforts by withdrawing from the relatively small European medical marijuana market.
Canopy Growth has seen its stock drop nearly 63% in the past year. Distilling for $102.9 million in stock, the New York City-based cannabis company continued down the same path, announcing last week the acquisition of Green Flash Brewing and the Alpine Beer Company.
The acquisitions will be made by Tilray's SweetWater Brewery company and are part of the medical cannabis company's strategy to position itself more broadly ahead of the eventual U.S. federal legalization of marijuana and rapidly expand its cannabis-infused beverage product line to scale.
The announcement didn't give Tilray stock much of an uptick. Last week, TLRY's shares opened at $7.51. Yesterday, they closed at $7.61, down nearly 3% on the day.
Tilray Weekly TTM
As for actual US federal legalization…
As the end of 2021 approaches, the biggest event that the stocks in the cannabis sector is clearly something that hasn't happened: the legalization of marijuana in the US.
Hopes that federal legislation would open the doors to the world's largest cannabis industry market have faded as lawmakers have pushed the process to 2022 and could delay it, possibly even more, until after the next presidential election in 2024.
The last move is definitely more of a setback than a routine delay. It came earlier this month when marijuana banking reform was barred from a Congressional defense bill. The exclusion was a negotiated outcome between the House of Representatives and the Senate. The House withdrew an amendment to the bill that used language from the SAFE Banking Act that would allow federally regulated institutions such as banks to provide services to marijuana businesses.
Now the federal legalization timeline has blurred considerably.
Yet cannabis sales in the state of Michigan rose 66.1% in November compared to the same month last year, to $153 million. After the second anniversary of cannabis sales, the state's market continues to skyrocket.
Last month, cannabis became Michigan's third most valuable crop, trailing only corn and soybeans. New Cannabis Ventures reported that while total cannabis sales grew significantly year-over-year, growth is not level across all categories: drug sales fell 14% to $31.9 million, while adult sales rose 121% to $120.8 million.
November was the fifth best month in the history of the state cannabis market, with sales falling 6.6% sequentially from October this year.
