ACRGF - Why Has Acreage Holdings Fallen More Than 50% in Just 3 Months?
Things were looking good for Acreage Holdings (OTC: ACRGF) earlier this year when it reached an agreement with Canopy Growth (NYSE: CGC) that would see the two companies come together and form a potential powerhouse in North America. It came with a significant caveat, however, which was that marijuana would have to be legalized in the U.S., otherwise there would be some significant legal problems given that cannabis is still illegal in the U.S. at the federal level. There was a lot of excitement surrounding the companies and the potential they might be able to realize together.
In short, nothing has taken place since then. Ultimately there's nothing either company can do but continue with its day-to-day operations and wait for the U.S. government to legalize marijuana, which at this point does not appear to be imminent. Most Democratic presidential candidates have expressed support for legalizing marijuana, but not all. There's simply no reason to believe that there will be a resolution anytime soon, and as exciting as it may have been for shareholders to sign off on the deal, it could still be years away from happening. That reality has likely started to set in.
It didn't help that one of the main people driving that excitement and the deal itself, Bruce Linton, ended up being fired from his position as co-CEO of Canopy Growth not long after Acreage shareholders approved the contingent deal. That decision seems to have been spurred by the company's disappointing Q4 results, which did not sit well with the company's key shareholder, Constellation Brands (NYSE: STZ). Things only got worse in July when the CannTrust Holdings scandal hit and helped pile even more negativity atop marijuana stocks in general.