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Cannabis Summary for March 30, 2020

2020-03-30 19:39 ET - Market Summary

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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index dropped 8.36 points to 134.12 Monday, while the Canadian Securities Exchange Composite Index fell 2.18 points to 280.08. Sebastien St-Louis's Quebec-based cannabis producer Hexo Corp. (HEXO) sank 43 cents to $1.10 on 11.79 million shares after releasing its fiscal second quarter results, which were prepared "on a going concern basis." The company lost an eye-popping $298-million in the second quarter, $250-million of which was from impairment charges.

A little over half of the impairment charges relate to the company's decision to list its Niagara facility, which was acquired in Hexo's acquisition of Newstrike Brands Ltd., for sale. (Hexo paid $263-million for its acquisition of Newstrike.) The company ran "impairment testing" and concluded that an impairment charge of $138-million was required. The rest was a $111-million impairment charge to goodwill that Hexo says was caused by slow store openings and regulatory delays for cannabis 2.0 products in Canada.

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