German Health Minister Karl Lauterbach defended the planned controlled release of cannabis against criticism ahead of the expected vote in the Bundestag. “We can hope that with this law we can put an end to two thirds of the black market,” the SPD politician said on Deutschlandfunk on Tuesday.
There is widespread criticism of the plans from medical associations, as well as internal SPD politicians and interior ministers of the federal states. Lauterbach said that even among opponents of the reform it is not controversial that the current policy has failed. Younger people, in particular, are consuming more at the moment. “We are now leaving young people on the black market, in a taboo zone.” It's not about finding new consumers. “We simply want to allow young people aged 18 to 25 who are now consuming to consume more safely.” Lauterbach said the law would be approved in the Bundestag.
Investors in Germany had been waiting for the launch for a long time and expected a jump in prices from relevant suppliers. This also occurred. Shares in Munich-based SynBiotic rose 30%, Berlin-based Cantourage rose 34%. However, the all-time highs of the two relatively young companies are still a long way off. Both reached this value shortly after their IPOs: SynBiotic at 42 euros in November 2021 and Cantourage at 40 euros in November 2022. But then things went downhill quickly – for SynBiotic to a record low of 2.86 euros in December 2023 and for Cantourage to 5.86 euros in January 2024. Now it's 7 or 8 euros – so there's still plenty of room for improvement. Traders see securities as objects of speculation and the market capitalization is also too low.
How a price increases tenfold
The Canadian supplier Aurora Cannabis is also represented in Germany. But its course is getting even worse. Down 7% this year, down 52% for a year, it's been a penny stock for almost a year now, with one brief exception. In its most recent fiscal quarter, the company reported a loss of $25.2 million. This reduced the negative value compared to the previous year, when it was still 47.71 million. On Tuesday, the price suddenly increased tenfold. What happened?
The company used a trick. He performed what is known as a reverse split. This is the opposite of a stock split. The goal is to give the action more weight again by combining multiple actions into one. The backdrop was an imminent delisting from the stock exchange, as according to Nasdaq rules the price cannot be quoted below 1 dollar for an extended period of time.
Canadian competitor Canopy Growth is only slightly better off. The stock has lost 23 percent since the beginning of the year and 85 percent since the beginning of the year. In the third quarter alone, the loss was US$230 million. In the case of Canopy Growth, there was also a recent 10:1 reverse split.