Beaten up ASX cannabis shares showing signs of life

Beaten up ASX cannabis shares are moving higher this week.

| More on:
cannabis farmer in the fields checking the crops

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX cannabis shares were once one of the hottest sectors with no shortage of new pot stocks hitting the market.

The Cann Group Ltd (ASX: CAN) share price, for example, skyrocketed almost 300% between September 2017 and January 2018 amid the federal government allowing medicinal cannabis exports and booming M&A deals taking place across the sector.

Unfortunately, money came out of this sector as fast as it went in.

Fast forward to today, most ASX cannabis shares sit around multi-year, if not all-time lows. It isn't unusual to find players down 80-90% from their all-time highs.

Despite being beaten up and battered, these cannabis shares have managed to find somewhat of a floor in recent months.

While trading sideways for the past 1-2 months, this week has proven to be a small win for these beaten-up stocks.

The Cann Group share price is up 20.5% this week to a 3-month high of 34 cents.

Althea Group Holdings Ltd (ASX: AGH) is up 9.5% to a 2-month high of 29 cents.

Similarly, Ecofibre Ltd (ASX: EOF) is up 4.7% to a 4-month high of 89 cents.

Why ASX cannabis shares are bouncing higher?

ASX cannabis shares are likely taking off after a 7.1% jump in the Global X Cannabis Exchange Traded Fund (ETF) on Tuesday night.

The cannabis ETF invests in companies across the industry, involved in the legal production, growth and distribution of cannabis and industrial hemp.

Canadian and US-listed companies make up more than 90% of its allocation but the ETF does have a small allocation in Creso Pharma Ltd (ASX: CPH).

Last month, the Motley Fool US reported that a panel from the US House of Representatives is preparing for a vote to "federally legalise marijuana" outright.

This move will look to "decriminalise marijuana federally" in the US by removing it from the Controlled Substances Act.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A man wearing a red jacket and mountain hiking clothes stands at the top of a mountain peak and looks out over countless mountain ranges.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another disappointing day for ASX investors this Thursday.

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Share Gainers

Why Pinnacle, PWR, Race Oncology, and Vulcan shares are flying today

These shares are having a good session on Thursday. But why?

Read more »

A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.
Share Gainers

Why Boss Energy, Emeco, Mineral Resources, and Plenti shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
Share Gainers

3 ASX 300 shares going gangbusters on Wednesday

Investors are bidding up these three ASX 300 shares today. But why?

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a huge Tuesday for ASX shares, with the index resetting its record high.

Read more »

Woman holding gold bar and cheering.
Gold

Why are ASX gold shares rebounding today?

ASX investors are going for gold today.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

Why Meteoric Resources, Resolute Mining, Sonic Healthcare, and TechnologyOne shares are roaring higher

Let's see why investors are getting excited about these shares on Tuesday.

Read more »

Two kids in superhero capes.
Small Cap Shares

Guess which 2 ASX small-cap shares just rocketed 50%+ on big news!

Investors are sending these two ASX small-cap stocks through the roof on Tuesday.

Read more »