Aurora Cannabis Inc (TSE:ACB) (OTCQB:ACBFF) (FRA:21P) and the rest of the cannabis sector experienced an acute volume problem today. This pattern was a continuation of the sluggish trading pattern last week, where volume declined each session (all five sessions traded below the rolling 3-month daily average). Today, the dam holding prices at important near-term technical levels gave way on ACB.

If cannabis investors were hoping for some posthumous 4/20 rally, they were sadly disappointed. Aurora Cannabis traded lower $0.59 to $8.02/share (↓6.85%); Emerald Health Therapeutics shed $0.10 to $4.73/share (↓2.07%); Aphria declined $0.51 to $10.09/share (↓4.81%) in-line with sector norms. Unanimous sector beacon Canopy Growth stumbled $1.85 to $28.15/share (↓6.20% ), also leading the herd forward. Volumes were unusually light in most issues across the board.

Company Closing Price Loss/Gain ($) % Loss/Gain Volume Emblem Corp 1.55 0.01 0.65% 270.99k The Supreme Cannabis Company Inc. 1.66 0.01 0.61% 606.19k OrganiGram Holdings Inc 4.01 0.02 0.50% 457.26k Maricann Group Inc. 1.66 0 0.00% 2.14m THC Biomed Intl Ltd 1.31 0 0.00% 186.35k CannTrust Holdings Inc. 7.08 0 0.00% 362.60k The Hydropothecary Corporation 4.25 -0.02 -0.47% 1.50m InMed Pharmaceuticals Inc. 1.23 -0.01 -0.81% 353.70k Newstrike Resources Ltd. 1.03 -0.01 -0.96% 1.29m MedReleaf Corp. 19.45 -0.24 -1.22% 269.65k Hiku Brands Company Ltd. 1.64 -0.03 -1.80% 795.81k Cannabis Wheaton Income Corp. 1.52 -0.03 -1.94% 867.88k Emerald Health Therapeutics Inc. 4.73 -0.1 -2.07% 480.41k Invictus MD Strategies Corp 1.83 -0.04 -2.14% 354.28k MYM Nutraceuticals Inc 1.75 -0.06 -3.31% 346.74k Abcann Global Corporation 1.58 -0.06 -3.66% 838.11k Namaste Technologies Inc 1.57 -0.06 -3.68% 1.76m WeedMD Inc. 1.86 -0.09 -4.62% 1.15m Cronos Group Inc. 7.02 -0.35 -4.75% 1.86m Aphria Inc. 10.09 -0.51 -4.81% 2.87m CanniMed Therapeutics Inc. 30.77 -2.03 -6.19% 13.76k Canopy Growth Corporation 28.15 -1.86 -6.20% 4.21m Cannabix Technologies Inc 1.8 -0.12 -6.25% 354.00k Aurora Cannabis Inc. 8.02 -0.59 -6.85% 6.98m Isodiol International Inc. 0.84 -0.09 -9.68% 7.01m

While Aurora Cannabis under-performance wasn’t too drastic in comparison, it did falter under some noteworthy near term resistance zones. As we wrote a few days ago, the $8.70-9.00/share area was the near term resistance zone for the company. After testing both regions several times last week, bears finally took charge as bulls couldn’t provide enough thrust to test break through. By the close, Aurora shares extended down to around $8.00/share.

At under 7 million shares traded (6,981,639), average daily volume was about half of its 3-month median. While tepid volume didn’t necessarily hinder Aurora Cannabis’ share price during the late 2017 mega run-up, that dynamic usually means prices are headed lower in today’s environment. A similar dynamic holds true for the rest of the cannabis sector. It’s a scenario we’ve seen time & again since the cannabis sector highs back in January 2018—quite typical bear market activity.

The silver lining for the sector is the resilience being shown by California cannabis players. The list includes the likes of Sunniva Inc, CannaRoyalty Corp and High Hampton Holdings Corp and others. Looking at the charts, we’re seeing a general out-performance vis-à-vis their more robustly valued Canadian operators. Not so much in terms of outright moves highly, rather, less degradation on down days compared to the pure-play Canadian companies.

Sunniva rose $0.15 to $8.65/share (↑1.76%), CannaRoyalty shed $0.03 to $4.42/share (↓0.67%), while High Hampton declined with the sector at-large.

Besides the obviously bullish overtones coming out of Capitol Hill recently, discounted valuation could be the driver. As Sunniva CEO Dr. Anthony Holler told the Midas letter on 4/20:

There’s a lot of opportunity in California. One of the things I would say is assets in Canada are very, very highly valued. And it’s hard not to overpay for assets in Canada right now. In California, it’s more like regular business in terms of valuations so, you’re going to see us move now.

CEO Dr. Anthony Holler discusses his company’s plans to put the pedal to the metal in terms of developing their California strategy in the wake of statements made by US legislators that seem to support federal de-prohibition of Cannabis

It will be interesting to see if this trend continues. With California’s retail market around slightly larger than Canada’s—and with a fragmented landscape where nobody truly dominates, the next big investment opportunity could reside with whoever comes out on top in the Golden State.

It’s a narrative Midas Letter will continue to monitor in the days ahead.