Shares of several Canadian cannabis companies temporarily halted on TSX

Several Canadian cannabis companies had their stocks temporarily halted on the Toronto Stock Exchange early Friday afternoon due to volatile swings in trading.

The Investment Industry Regulatory Organization of Canada (IIROC) halted trading on Canopy Growth Corp., Aphria Inc., Aurora Cannabis Inc. and MedReleaf Corp. between approximately 12:15 p.m. and 12:30 p.m. ET. Trading resumed for all shares within about 10 minutes.

Shortly before the halts, shares of Canopy Growth dropped 14.78 per cent, Aphria 15.5 per cent, Aurora 14.7 per cent and MedReleaf dropped 19.2 per cent.

IIROC said the reason for the temporary halts was the single-stock circuit breaker rule, which limits sudden price swings of major Canadian stocks.

This means that a five-minute halt of trading in a security is automatically triggered — and may be extended for an additional five minutes — across all Canadian marketplaces if the price of the security swings 10 per cent or more within a five-minute period.

Vahan Ajamian, a research analyst with Beacon Securities Ltd., said the sudden drops in cannabis companies' stock prices could be explained by year-end profit taking.

"All these stocks have had a fantastic few days and months," he said. "People are likely looking to crystallize gains by the end of the year."

Canadian pot stocks have driven the Toronto stock index's health-care sector surge this week, playing a significant role in the TSX/S&P composite index's record-setting pace on Wednesday and Thursday.

In the previous five trading sessions from Dec. 20 to Dec. 27, Aphria gained 24.4 per cent, Aurora 27.2 per cent, Canopy Growth 29.8 per cent and MedReleaf 26.4 per cent.

Canadian marijuana companies were riding high in the latest quarter as they ramped up production capacity ahead of the deadline for the legalization of recreational cannabis next summer while also extending their reach outside the country's borders.

Over the past month, shares of Aphria soared 56 per cent, from $11.47 on Nov. 28 to $18.00 on Dec. 28. Over that same time period, Aurora increased 14 per cent, from $7.83 to $8.94. Canopy Growth increased 61 per cent, from $18.85 to $30.41. MedReleaf increased 24 per cent, from $16.19 to $20.19.

In trading Friday, shares of Aphria gained 70 cents to close at $18.70, Aurora added 66 cents to end at $9.60, Canopy Growth slipped 67 cent to $29.74, and MedReleaf rose by $1.05 to hit $21.24.