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Spikes In Cannabis Sales During COVID-19 Crisis Boosting Pot Stocks

Let’s start with a quick quiz. What do toilet paper and marijuana have in common?

It turns out, in a crisis, people want to hoard both.

Yes, as the economy crashes, pot stocks — at least a few of them — are showing signs of a little upswing as individuals who are ordered to stay home or opt to self-isolate feel the need to stock up. The result is marijuana sales have ratcheted up in the last week.

In addition, provincial governments in Canada and state officials in the U.S. where the weed is legal have deemed the substance an essential, which means that even in jurisdictions with the tightest lockdown protocols, cannabis stores can stay open.

Marijuana Sales Spike

Late last week, as the threat of COVID-19 intensified across North America and the sale of marijuana was spiking, Bank of America analyst Chris Carey commented that the cannabis sector could provide investors with a defensive move in a market downturn.

Carey pointed more specifically to Aphria (NYSE:APHA), (TSX:APHA), boosting its rating to a ‘buy,’ and reportedly explaining, according to BNN Bloomberg, that the Ontario-based grower could see its market share in Canada increase.

“Our checks across North America were consistent. Regardless of region, cannabis purchases have accelerated," Carey said in a note to investors.

Aphria Weekly Price Chart

At the end of last week, Aphria's shares moved from a low of US$1.97 (C$2.88) on Wednesday, March 18, to hit US$2.72 (C$3.89) on Friday. They closed last week at US$2.51 (C$3.58) and gained slightly more yesterday to end the day at US$2.54 (C$3.72).

Tilray Stock Rises

Aphria was not the only pot stock to gain ground last week. Tilray (NASDAQ:TLRY) shares also rose. They more than doubled from March 19 to March 20, going from a low of US$2.56 at the open last Thursday to hit a high for the week at US$5.03. The stock closed yesterday at US$3.85.

Tilray 300-Minute Price Chart

Merger Creates Largest CBD Company

Shares of Charlotte's Web (OTC:CWBHF), (TSX:CWEB), one of the world’s largest CBD oil extractors, gained more than 5% on Monday after announcing it would merge with Abacus Health Products (OTC:ABAHF), (CSE:ABCS), a Toronto-based firm specializing in over-the-counter pain and therapeutic skincare products made with CBD cannabinoid extracts. The shares closed at US$3.52 on the U.S. market, and C$5.10 in Toronto.

Charlotte's Web 300-Minute Price Chart

The US$68.2-million (C$99-million) deal creates the world’s largest vertically integrated hemp-derived CBD company.

Under the terms of the deal, Abacus shareholders will receive 0.85 of a common share of Charlotte’s Web for each Abacus share they hold. The new venture will have a 35% share of the U.S. CBD market, the companies claim, according to a joint statement issued Monday.

Shares of Abacus gained more than 21.5% Monday to close at US$2.41 on the U.S. OTC markets, while on the Canadian stock exchange the shares rose about 22.8% to end the day at C$3.50.