Cannabis has been legal in Canada since only 2019 and continues to evolve to meet the growing demands from consumers coast to coast.
Companies such as Adastra Holdings (CSE:XTRX)have been at the forefront of the industry for just as long thanks to its license from Health Canada in 2019 for its co-located analytics testing lab, Adastra Analytics.
Since legalization, cannabis stocks have fluctuated dramatically, riding the highs and lows of the market – just like any other industry – which has nonetheless taught investors to play the long game and be patient.
When it comes to Adastra Holdings, the company went public in early 2020 and began trading at C$1.44 per share before reaching a high of $2.94 on Sept. 18, 2020.
Adastra Holdings’ historical performance
Since going public, Adastra Holdings’ stock price has had a rocky ride. With its headquarters out of Langley, British Columbia, shares of the company have been reflected in the struggles of the market.
Case in point, Canadian sales of cannabis products totaled roughly $2.6 billion in 2020, representing a 120 per cent increase compared with 2019, largely in part because of the COVID-19 pandemic.
During the early days of the pandemic, cannabis users increased their use of the drug, which also led to an increase in the number of stores across the country. By the end of 2020, the number of stores had increased nearly eightfold when compared with 2018.
All of this is to say that Adastra Holdings’ stock performance throughout 2020 follows a similar pattern to how consumers responded to the market. By the end of the year, shares of the company had dipped to $1.38 and, since then, have been on a steady decline.
Adastra shares spike after approval for cocaine research
In early 2023, Adastra Holdings received approval from Health Canada to include cocaine as a substance that it can legally possess, produce, sell and distribute.
The company stated in a news release that it first received its Controlled Drug and Substances Dealer’s License in August 2022, which allows Adastra Holdings to possess, produce, sell and distribute up to 1,000 grams of psilocybin and psilocin.
The amended license approved in 2023 allows Adastra to interact with up to 250 grams of cocaine and to import coca leaves to manufacture and synthesize the substance.
“Harm reduction is a critically important and mainstream topic, and we are staying at the forefront of drug regulations across the board,” Michael Forbes, CEO of Adastra Holdings, said in a statement. “We proactively pursued the amendment to our dealer’s license to include cocaine back in December 2022. We will evaluate how the commercialization of this substance fits in with our business model at Adastra in an effort to position ourselves to support the demand for a safe supply of cocaine.”
Adastra Holdings shares rose from $0.45 to $0.85 after the announcement, and by March its share price had risen again to $1.33 – its highest level since 2020.
Adastra Holdings’ future outlook
Over the course of the past year, shares of Adastra Holdings are down yet again by more than 72 per cent to its current share price of $0.245 as of Monday.
Looking ahead, however, there is hope for a stock price rebound. According to TipRanks.com, analyst consensus is that Adastra Holdings is considered a “Strong Buy,” according to 10 expats, which could fuel a share price recovery.
The company is expected to report its next earnings in early May, which should also give investors some insight into how the company is performing and what to forecast from the cannabis producer for the rest of 2024 and beyond.
About Adastra Labs
Adastra is a leading cannabis processor, producer and co-manufacturer catering to the adult-use and medical cannabis sectors.
The company distributes premium cannabis products and manages a portfolio of successful proprietary brands: Phyto Extractions and Endgame boast a robust presence with an expanding distribution network, symbolizing top-tier quality. Its products such as cannabis concentrates are accessible at 2,000-plus retail locations across Canada.
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