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Canada’s primary stock index will add 13 companies next week, including a lithium miner and a couple of cannabis companies.

S&P Dow Jones Indices, manager of the S&P/TSX Composite Index, said Lithium Americas Corp. , OrganiGram Holdings Inc. and Village Farms International Inc. will join prior to the open of trading on March 22.

The other additions are AcuityAds Holdings Inc.; Canaccord Genuity Group Inc.; Denison Mines Corp.; Dye & Durham Ltd.; Endeavour Silver Corp.; Goeasy Ltd.; NexGen Energy Ltd.; SunOpta Inc.; Turquoise Hill Resources Ltd.; and Westport Fuel Systems Inc.

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The only deletion is Lundin Gold Inc.

The changes mean the index will comprise 231 members, bringing it closer to past levels when it’s held as many as 250 companies. Market tumult and other corporate changes had caused the index to drop to the current 219 members.

No changes are planned for the S&P/TSX 60, an index of select larger-capitalization stocks.

With the growth of index funds and other passive-investing strategies, whether a stock is part of a major index can have a meaningful effect on share prices. Fund managers who track an index need to hold shares in the companies. The stocks can see a price bump before and even after inclusion. Similarly, companies removed from the index lose a source of demand for their shares.

In November, 2019, research by Morningstar Direct for The Globe and Mail found $219-billion in Canadian mutual funds and exchange-traded funds whose returns were closely correlated with those of the companies in the S&P/TSX Composite – including the ones that explicitly say they track that index.

To get into the Composite Index, a company’s float-adjusted market capitalization must be 0.04 per cent, or four-hundredths of a percentage point, of the total value of the index. Also, companies must be listed on the TSX for at least six full calendar months as of the month-end prior to the quarterly review, so recent initial public offerings will have to wait a bit longer for inclusion.

To stay in the Composite, a company’s float must not drop below 0.025 per cent, or 2.5 hundredths of a percentage point, of the total value of index.

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