Mixed results for pot stocks following legalization

Canadian investors had few reasons for revelry on the first day of cannabis legalization Wednesday as some of the industry’s biggest names saw their stock prices fall.

Shares in Canopy Growth Corp., Aurora Cannabis Inc., HEXO Corp. and Tilray Inc. fell between about two and 6.5 per cent while the North American Marijuana Index was off by 2.4 per cent on the day.

Investor celebrations were sparse on Day 1 of legalization, said Michael Currie, vice-president and investment adviser at TD Wealth.

“Not as much as the consumers,” he said in an interview.

The main exception was Aphria Inc., which gained 71 cents, or 3.8 per cent, to $19.40, on rumours of approval of the company’s application for a U.S. listing.

Currie said trading of cannabis shares is sticking to the motto of “buy on rumour, sell on news.”

Although pot stocks have been volatile, they have enjoyed large gains over the past few years on anticipation of a boom.

The start of sales means companies will have to report revenues and profitability.

“It’s no longer speculative and hopes. We’re going to see some hard numbers coming out in the next quarter and people are saying, ‘I’ve had a nice run, why take the risk, I’m going to take my money off the table here.’”

Currie said he doesn’t think it’s a coincidence the sector’s decline is happening on opening day.

“Until we see the first round of earnings reports, things should probably stick in this range.”