As the World Health Organization declared the COVID-19 coronavirus outbreak a global pandemic, Canadian stock markets suffered their worst day since 1940, dropping 12% on Thursday alone. This registered in the sector as double-digit declines for all 12 major LPs followed by BNN Bloomberg.
Bloomberg, Twitter--David George-Cosh
- The bloodbath began well before Thursday. On Monday, the six largest LPs lost a combined $1.74B in market value, with Canopy alone losing $841M.
- By Friday, some stocks were beginning to pull up, but at different rates.
This would be bad news at the best of times, but as Bloomberg's Kristine Owram said, this is especially worrisome for post-legalization legal REC, where many companies are already struggling to survive.
- How will the sector survive? According to Eight Capital analyst Graeme Kreindler, those best prepared for coming supply chain strain are those with stable cash positions (such as Canopy, Cronos, and Aphria, which have the sector's highest net cash positions) and those who've built flexible product offerings (i.e. they're not reliant on the availability of vape hardware).
- Kindler also produced a handy infographic measuring potential COVID-19 risks to different segments of the cannabis supply chain, from construction, plant material, cultivation, and extractions to manufacturing, distribution, and retail.
- CIBC analyst John Zamparao warned the pandemic will likely make traditional investors even leerier about putting money into cannabis.
The safety of cannabis-sector employees is on everybody's minds. BC LP Tantalus Labs' CEO Dan Sutton posted his company's COVID-19 policy to Twitter and encouraged others to do the same. Cannabis geneticist Ryan Lee called for all companies to follow Tantalus's lead by posting their COVID-19 policies as well. They didn't.
Twitter--Dan Sutton, Ryan Lee
- As concern about the pandemic grew, cannabis event after cannabis event was canceled. As we went into production on Friday, Vancouver's 4/20 protest-ival was cancelled. Don't plan on making any trade show trips for a while.
Inside the Jar, Twitter--Dana Larsen
- Quebec's REC retailer the SQDC announced it will remain open for the time being, but would be ramping up cleaning and training employees on "necessary hygiene measures." They will also monitor employee health, though they remind Quebeckers their website works just fine.
Twitter--La SQDC--In French