Oct 25 2010

The Penny Stock Pot Pop of 2010

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While marijuana stocks saw some gains over the past month, most of them had fallen from much loftier heights and the current run-up has a long way to go to equal that of April 2009.

At that time Medical Marijuana, Inc. (MJNA) announced a 10-for-1 split and Bruce Perlowin was receiving a lot of extremely kind reporting from the major media.

On April 29th of that year, MJNA closed at $0.62 and Cannabis Science, Inc. (CBIS) closed at $1.4.

They, along with the rest of the marijuana stocks, generally sank like a rock from that point, bottoming out during the 3rd quarter of this year with MJNA closing at $0.058 on August 10th and CBIS closing at $0.042 on September 23rd.

The only marijuana identified stock traded through an exchange is Converted Organics (COIN), trading on the Nasdaq, but not for long if the price doesn’t rise above a dollar.

COIN is an organic fertilizer company out of Boston.  While they may be a marijuana identified stock, neither the word “marijuana” nor the word “cannabis” appear on their website.

On 3 Mar 2008 COIN traded at a high of $13.7391 and from there it sank to $0.390 on 8 Sep 10.  It closed at $0.50 on 22 Oct 2010.

The rest of the marijuana identified stocks are Over-the-counter (OTC) and are presented here by their OTC Market Tier.  In the U.S. OTC market trades are carried out by market-makers, whereas exchange trades are carried out by facilities constructed for the purpose such as the New York Stock Exchange.

OTCQB is the middle tier of the OTC market. OTCQB companies are registered and reporting with the SEC or a U.S. banking regulator, making it easy for investors to identify companies that are current in their reporting obligations

CBIS – Cannabis Science

CBIS is a medical marijuana research and development company incorporated in Nevada and located in Colorado Springs, Colorado.

CBIS hopes to patent and acquire FDA approval for both the manufacturing process and delivery system of medical cannabis.

Anticipated products are cannabis lozenges and smokeless cigarettes.   On 12 Aug 10 CBIS announced a joint agreement with Smokefree Innotec (SFIO) to market smokeless marijuana cigarettes.

The President and Chief Executive Officer, Robert Melamede, was Chairman of the Biology Department of the University of Colorado at Colorado Springs until 1995 and is a prominent medical marijuana advocate.

The Chief Financial Officer is Richard Cowan.  From August 1992 to August 1995, Cowan served as executive director of NORML and is currently editor of Marijuana News.

CBIS gained 315% from 1 Oct 10 when it closed at $0.048 to 22 Oct 10 when it closed at $0.199.

As of 20 Aug 10 CBIS had 84,970,574 shares of common stock outstanding.

CMSI – Cannabis Medical Solutions, Inc.

CMSI offers a complete line of merchant services for medical marijuana dispensary businesses including, Visa, MasterCard & merchant accounts, debit & credit card transaction processing, gift/loyalty card programs and POS terminals.

On 17 Aug 10 CMSI announced it will provide merchant services, cash advance, POS systems and the CMSI proprietary “MediPayment” closed loop payment system to all clients and dispensary contacts of MJNA.

CMSI presently provides services to multiple locations throughout California, Colorado and Montana.  They are located in Ashland, Oregon.

On May 11th CMSI declared a 10 for 1 split with record date of May 14th, payable June 1st.

On May 11th CMIS closed at $0.015.  On May 14th it closed at $0.090.  On 22 Oct 10 it closed at $0.0290, up 93% from the low of $0.015 on May 11th, and 65% above the close of 8 Oct 10 at $0.0190.

As of 9 Aug 2010 there were 347,652,240 shares outstanding.

It should be noted that CMSI is the only marijuana stock offering financial services for medical marijuana businesses that is current in their SEC filings.

PINK SHEETS CURRENT – Companies that follow the International Reporting Standard or the Alternative Reporting Standard by making filings publicly available through the OTC Disclosure & News Service pursuant to Pink OTC Markets Guidelines for Providing Adequate Current Information (pdf) are designated as Pink Sheets Current Information.

The Current Information category is based on the level of disclosure and is not a designation of quality or investment risk. This category includes shell or development stage companies with little or no operations as well as companies without audited financials and as such should be considered extremely speculative by investors.

AMNG – The Amergence Group, Inc.

AMNG focuses on developing, nurturing, and rapidly expanding selected emerging or disruptive companies across a wide range of industries and disciplines.

On 13 Oct 10 AMNG announced that its subsidiary, Altitude Organic(TM) Licensing Corporation, has secured a strategic alliance with US-based manufacturer Hydrobotanical Engineering, a leading manufacturer of hydroponic, aquaponic, and aeroponic portable automated growing environments featuring secure, managed, turnkey growing solutions for the medical marijuana industry.

On October 12th AMNG closed at $0.010.  On the 13th it closed at $0.0089.  On the 14th it closed at $0.0061.

PINK SHEETS LIMITED – Companies in this category have limited financial information not older than six months available on the Pink Sheets News Service or have made a filing on the SEC’s EDGAR system in the previous six months.

GRNH – Greengro Technologies

GRNH provides management services for the planning, construction, staffing and operation of medical marijuana dispensaries and nurseries on behalf of non-profit patient co-operatives. Through long-term contracts, GreenGro operates non-profit centers, returning all unused patient “contributions”, on a pro-rata basis to each co-op member in the form of additional product.

The Main focus of GreenGro is devoted to the acquisition of patients through the management of non-profit cooperatives. Plans are currently underway for the construction of 6 patient cooperatives, under the “GreenGro Technologies” name.

The Company is responsible for the management of all patients, dispensing of medical marijuana, and other related medicinal products, as well as increasing its provider base through advertising, clinics and physicians. Dispensary are generally 1000 to 1200 square feet of retail space requiring a full time manager/operator and 2 support staff all employed through GreenGro Technologies, a wholly owned clinic management subsidiary. The Company has entered into long term agreements to provide management, staffing and product supplies to each cooperative dispensary. GreenGro is the exclusive supplier of cannabis products to all managed facilities.

On 22 Feb 10 GRNH issued a 1 for 100 reverse split.

On 14 Oct 10 GRNH closed at $0.0066.  On 22 Oct 10 it closed at $0.056, up 750% from the 14th.

IMAI – International Merchant Advisors

IMAI provides direct access to the critical tools necessary to satisfy the growth requirements of international emerging and re-emerging public and private companies. These tools include providing mergers and acquisitions, strategic advisory services, capital raising strategies, direct access to capital markets, and organizational development and business plan execution.

On 9 Mar 10 IMAI announced the creation of a new subsidiary in Colorado, IMAI Wellness Centers, Inc., to pursue the development of the company’s new Wellness Centers and Medical Marijuana clinics for chronic pain relief. IMAI will also pursue acquisitions in addition to licensing and development in Colorado, where medical marijuana treatment is legal and can be operated on a “for profit” basis.

On 2 Feb 2010 IMAI closed at a high of $0.33.  On 13 Oct 10 it closed at $0.0018.  On 22 Oct 10 it closed at $0.0120, up 566% from the close on October 13th.

LLUX – LC Luxuries, Ltd.

LLUX is without a doubt the star of the Pot Pop of 2010.  On 25 Aug 10 it closed at $0.02.  The next day it closed at $0.51.  The next day it closed at $1.01.

On 27 Aug 10 it announced that its newly established subsidiary, U.S. Cannabis, Inc., a Nevada corporation, would begin the management of medical clinics in California.  The clinics would be staffed by California Licensed, board-certified physicians and would meet or exceed all regulatory standards.  The Company intends to be managing 10 clinics before the calendar year end, 2010.

On 3 Sep 10 it announced it had entered into formal negotiations with Weedmaps, LLC, to acquire the domain name “weedmaps.com” and the current operating website.

On 23 Sep it closed at $3.98 and has closed above $4.00 ever since.  On October 22nd it closed at $4.15, an astonishing increase of 20,650% since August 10th.

SFIO – Smokefree Innotec

CBIS announced on 12 Aug 10 a joint venture with SFIO to develop and market several high-tech smoke-free vaporized medical cannabis pharmaceutical products.

Under the joint venture, Smokefree Innotec, Inc. will provide its high-tech smoke-free vapor technology devices, and Cannabis Science will provide all the medical cannabis extract formulations. Both parties equally share in the revenues derived from this Joint Venture.

On that day SFIO closed at $0.0071.  The value continued to sink until on 5 Oct 10 it closed at $0.0035.  Then it took off, closing at a high of $0.0165 on 19 Oct 10, up 370% over the close on October 5th.

WARNING – Investors should be aware no firm is making a market in this stock on Pink Sheets.  All prices reflect unsolicited customer orders and investors may have a difficult time selling this stock.

MJNA – Medical Marijuana Inc.

MJNA was founded in March 2009 for the purpose of providing advanced business solutions to the rapidly expanding Medical Marijuana industry.

They claim to provide integrated tax oversight and collection solutions to local, state and federal governments, as well as business management solutions to the industry that will confidently ensure compliance with local, state and federal regulations.

Perhaps if they were current and compliant with their SEC filings they could find a firm to make a market in their stock, and the public would have more confidence in their product, whatever it is.

On August 10th, MJNA closed at $0.058.  On October 22nd it closed at $0.1030, up 77% since August 10th.

PINK SHEETS NO INFORMATION – Indicates companies that are not able or willing to provide disclosure to the public markets – either to a regulator, an exchange or Pink Sheets. Companies in this category do not make Current Information available via the OTC Disclosure and News Service, or if they do, the available information is older than six months.

Pink Sheets No Information includes defunct companies that have ceased operations as well as ‘dark’ companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securities should be considered highly risky.

PCIO – Marijuana Inc.

PCIO, along with MJNA, are Bruce Perlowin productions.

The press release of 26 May 10 states that PCIO intends to create ‘420’ friendly resorts similar to the vineyards and wineries in Sonoma and Napa counties.

PCIO intends to be the dominant developer, spearheading a variety of 420 resorts in Humboldt, Mendocino, Lake, Sonoma and Trinity counties.  These 420 resorts will include cannabis gardens with hundreds of different strains, accommodations, restaurants, tours of the local areas, including legal cultivation models and 420 educational programs, with other traditional tourist attractions and events.

While the PCIO website has an “investor” page, clicking on it gives a 404 “not found” error.  No financial information about the company can be found.  Nevertheless, PCIO, which closed at $0.0005 on 20 Apr 10, spiked up to 2 cents upon the name change in May from Preachers Coffee to Marijuana Inc.

On 13 Oct it closed at $0.01.  Then it spiked up to $0.0487 on 19 Oct 10, and closed at $0.025 on 22 Oct 10, up 150% from the close of October 13th.

Additional marijuana stocks include GW Pharmaceuticals (GWPRF) in the United Kingdom and Cynapsus Therapeutics (CYNAF) in Canada.  The election appears to have no impact on these.

Health Sciences Group (HESG) is being pumped on the internet along with the above marijuana stocks.  OTCMarkets has discontinued the display of quotes for this stock, giving it a skull & crossbones and rating it “caveat emptor” because of “public interest concerns”.

Among all the above stocks, only COIN, CBIS, and CMSI are current in their SEC filings.

Disclosure:  The author owns shares of CBIS, CMSI, GRNH, and MJNA.

A Penny Stock Play On Weed – Barron’s | 19 Oct 10

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