Pot Stocks Retreat as Aphria Short Report Offsets Upbeat Market

(Bloomberg) -- A broad market rally wasn’t enough to boost cannabis stocks Monday as the sector retreated on a short-seller report that called Aphria Inc. a “black hole.”

Aphria plunged as much as 29 percent, the biggest drop since Feb. 2013, after Quintessential Capital Management founder Gabriel Grego told a New York conference that the company has diverted about half of its net assets into inflated investments held by insiders. The pot sector also slid on the news, with the Horizons Marijuana Life Sciences Index ETF falling 4.4 percent at 10:10 a.m. in Toronto.

Tilray Inc. fell as much as 3.1 percent, Canopy Growth Corp. lost 3.8 percent and Aurora Cannabis Inc. retreated 5.3 percent. U.S. cannabis stocks weren’t hit as hard, with Curaleaf Holdings Inc. declining 0.1 percent and Green Thumb Industries Inc. falling 0.5 percent.

Based in Leamington, Ontario, Aphria is the fourth largest cannabis stock by market value. Before Monday’s decline, the company’s stock had lost 44 percent this year, in line with the decline in the BI Global Cannabis Competitive Peers index.

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