Pot Stocks May Be the Latest Mania But Show No Signs of Slowing

(Bloomberg) -- The publicly-traded market for all things marijuana-related has attracted its share of pro and con debates from politicians, policy wonks and investors -- but one thing no one can ignore is the momentum of the rally.

The North American Marijuana Index, or NAMMAR, has climbed more than hundred and forty percent since its one-year low, reached on September 7, 2017. By contrast, the S&P 500 has been risen only about only seventeen percent in the same period.

The pot market seemed to have lost steam around mid-August but Constellation Brands shocked investors with an additional $3.8 billion investment in Canopy Growth Corp., which super-charged the rally. The index is up about 50 percent since then.

The marijuana industry skirted a road-block last week when Cronos Group Inc. became the subject of scrutiny from short-seller Citron Research and plunged 28 percent. But within days, the industry shrugged off the negative sentiment when Cronos entered a partnership with Ginkgo Bioworks to develop lab-grown cannabis. The stock was up as much as 15 percent today, while other pot stocks also surged, taking the NAMMAR index to its highest intraday since last January 29.

Citron Research put another target in its cross-hairs Tuesday -- recent IPO Tilray Inc. -- but had less short-term success with the call. The maker of medicines derived from cannabis briefly pared a small portion of its Tuesday advance after Citron’s publication, but remains up 17 percent, bringing its total gains since the mid-July IPO to 343 percent.

Other top performers within the sector include Canopy Growth, which received a Street high price target of C$74 from Cowen and Company due to its “lead in weed” status. The Green Organic Dutchman also rose as much as twenty-three percent after the company extended a deadline with top holder Aurora Cannabis Inc., which entitles Aurora to acquire an additional eight percent of the common shares of the Company.

To contact the reporter on this story: Aoyon Ashraf in Toronto at aashraf7@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Scott Schnipper, Brad Olesen

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