Following news in the legal marijuana arena is a little like taking an 80-mph rollercoaster ride with its ups, downs and sideways surprises.
Here’s an update on four marijuana penny stocks that most of the time are making the right moves at the right time to position themselves for a potentially gargantuan market that most industry experts say will become a reality sooner rather than later.
Stockholder Shrug Their Shoulders
Growlife Inc.’s (OTCBB: PHOT) stock volume continued to soar Feb. 11, 2014 with 51,738,969, shares changing hands, substantially higher than its three-month average volume of 38,061,546 shares.
This comes on the heels of the company’s unexpected move to increase its authorized common stock shares by two-thirds on Friday.
Growlife Inc. announced on Feb. 7, 2014 that a majority of its stockholders preliminarily approved a provision that would allow the company to increase the number of its authorized shares of common stock from 1 billion to 3 billion.
Stock Loses 4.83% of Share Value
In the surprise announcement, GrowLife requested all media to accurately report that the increase is to the authorized shares, not the outstanding, and does not “immediately dilute” the current issued and outstanding share count. The company also pointed out that the provision was approved by 88.2% of the shares entitled to vote on the sole proposed item.
But so far, stockholders aren’t responding positively or negatively to the action. On Feb. 11, PHOT share price closed at 32 cents a share, down 2 cents, or 4.83%, from its close of 34 cents the previous day.
Some industry experts contend this move gives the Woodland Hills, Calif. holding company that supplies equipment for legal marijuana growers a way to raise more money for expansion. Others are puzzled by the move and are not sure what effect it might have long term on the company’s current shareholders.
Growlife’s stock volume continued to soar Feb 11 with 51,738,969, shares changing hands, substantially more than its three-month average volume of 38,061,546.
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Developing Various Cannabis-Related Markets
Growlife is strongly positioning itself by developing various markets and deploying new products and services for the legal cannabis industry.
For example, one of its recently acquired companies makes hydroponic grow containers, which are designed to grow vegetables, herbs, flowers and fruits in any environment. The company appears to be vigorously considering every possible angle and service to capture its piece of the legal cannabis pie.
On Jan. 31, Growlife announced that it had entered into a strategic partnership with RXNB Inc. Growlife entered into an agreement to purchase a 40% equity stake in RXNB Inc. To sell and distribute RXNB proprietary technologies globally and share profits related to technology licensing, subject to the approval of the GrowLife board. GrowLife currently has a 45% ownership interest in OGI, with conditions under which it can gain majority interest.
RXNB is an investment company with holdings in drug formulation, manufacturing, and distribution. The company represents a recent roll-up of several independent companies in the pharmaceutical and nutraceutical market. RXNB has numerous pending patents in the field of THC research and development. RXNB has a portfolio valuation of $110 million dollars and approximately $27.5 million dollars in annual revenue.
More Information Needed
While this certainly seems like a strong positioning move by Growlife, and it's nice to know that the company it has just acquired a 40% equity share in has revenue of 27.5 million, we don't have any idea if the company has earned any profits. So again, we must wait for more thorough info before getting too excited about Growlife's latest moves.
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Distributor Found for Cannabis Anti-Aging Cream
On Feb 11, Medical Marijuana Inc. (OTC PINK: MJNA) share volume continued to soar, with 35,486,952 shares changing hands, significantly higher than its 3-month average of 24,532,731 shares.
The continuing surge in volume was probably triggered by a Feb. 5 announcement that HempMedsPX™ – it subsidiary is expanding global sales based on CannaVest Corp. (OTC: CANV)'s subsidiary, PhytoSPHERE Systems' 1,500% increase in production capability for industrial hemp-based cannabidiol (CBD) oil. PhytoSPHERE's San Diego laboratory houses specialized equipment for high pressure processing of the world's most abundant source of industrial hemp-based CBD oil.
Medical Marijuana’s has employed a formidable diversified strategy in order to establish a foothold in this burgeoning industry.
For example, on Jan. 31 the San Diego holding company said that it had entered into an agreement with an unnamed company to sell Medial Marijuana’s anti-aging cream through the unnamed company’s in-home sales force.
According to the release, the first purchase order from the home-based business organization will be $1,072,251 in products that will ship before the end of the first quarter."
This positive news came a few days after Medical Marijuana announced its newly-formed subsidiaries would be providing armored transport services for companies in the cannabis industry.
Marijuana Inc.’s subsidiary, Wellness Managed Services, has gained this capability by purchasing a 50% stake in MPS International.
Cannabis Security Issue
In a written statement, MPS International’s CEO Mike Roberts outlined some specifics about the new armored marijuana transport service.
“Large amounts of product will be moved from grow to wholesaler, warehouse, testing facilities, bakeries, infusion laboratories and finally to retail locations,” Roberts said. “Post transaction, and especially right now with federal regulations prohibiting FDIC insured banks from offering financial services to cannabis industry businesses, large amounts of cash will need to be transported between parties securely as this creates an easy target for predators and competing businesses,” he added.
Potentially Lucrative Opportunity
In the release, Roberts went on to outline the potential opportunity that existed for providing armor transportation for currently legal cannabis businesses. He pointed out that there are now about 448 dispensaries in Colorado alone, while in California there are an estimated 2,700 dispensaries, co-operatives, wellness clinics, and taxi delivery services.
“Using an average of one armed security officer working 10 hour shifts, 7 days per week billing at the industry standard of $25/hour armed, 52 weeks per year, annual gross revenue created by just 11 locations is more than $1,000,000 for just static physical security,” Roberts explained.
Once the company establishes this footprint, it says it will evaluate other cannabis markets such as those in Canada.
On Feb. 11, MJNA share price closed at 26 cents, down 4 cents from its closing price of 30 cents the previous day.
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Still Riding the Hemp Legalization Wave
The volume of Creative Edge Nutrition Inc.’s (OTC Pink: FITX) continued to spike on Feb. 11, with 147,251,708 shares changing hands, nearly double its three-month average of 88,011,933 shares.
The volume was sparked in part by the passage by Congress last week of a farm bill that for the first time legalizes the use of Hemp for research and farming. Many observers believe this is just the latest domino to fall in a line of dominos that will eventually come crashing down as the medical and recreational use of marijuana is legalized throughout the United States
Health Canada forecasts that there will be half a million medical marijuana users in Canada in 10 years, but Creative Edge Nutrition Inc.’s (OTC Pink: FITX) CEO Bill Chaaban told Forbes Magazine Dec. 30 that with the availability and the assurance of consistency of the product it could only take two years for users to reach that magnitude.
A Potential Windfall - Operative Word ‘Potential’
These forecasts point toward a potential windfall for Creative Edge and other companies like them, if the Canadian government grants the Michigan-based company the final approval to sell medical marijuana in the country.
On Jan. 9, Creative Edge inched closer to approval by complying with the Canadian government’s regulations on tracking 1.3 million pounds of medical marijuana annually. The medical marijuana is to be distributed by Creative Edge’s wholly owned subsidiary CEN Biotech.
Creative Edge cleared this obstacle by using a new state-of-the-art M3Hub Seed-to-Sale tracking platform, which meets and exceeds Health Canada's tracking compliance regulations. This news comes less than two months after Creative Edge broke ground on its new 58,000-square-foot future Medical Marijuana distribution center, which will be attached to the company’s current 26,400-square-foot facility.
On Feb. 11, FITX shares closed at 11 cents down 1cent from its closing price of 12 cents the previous day.
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Robust Stock Volume Continues
Despite Tranzbyte Corp. (OTC PINK: ERBB) recently being forced to report the collapse of a deal with a medical-marijuana dispensary to use the dispensary units it sells, its stock volume is still going through the proverbial roof.
On Feb. 11, Tranzbyte’s stock volume hit 241,171,399 shares - nearly double its three-month average of 138,275,092 shares.
Obtaining New Age/ID/Fraud Security Technology for Dispensers
This comes only a few days after the Tempe, Ariz.-based company Feb. 6 announced that it had selected Cyber Kiosk Solutions, Inc. to provide the final component of the Age/ID/Fraud verification on its medical-marijuana vending machine and its integration currently in progress. According to Tranzbyte, CYBK's software was custom designed for use in the marijuana industry and is expected to be one of the first approved pieces of software to be used by and within the state of Colorado. An earlier version of the software is operating in over 6,000 drug and liquor stores around the country where it is currently used for Age/ID/Fraud verification in the purchase of alcohol, tobacco, and pharmacy drugs.
A Major Reversal
On Jan. 28, just three days after Tranzbyte announced to the world it had reached a verbal agreement with PARC, a licensed Arizona dispensary in Phoenix to use its dispensary machines, it reversed itself saying that a final written agreement could not be achieved.
The company then tried unsuccessfully to put a positive spin on the major misstep by saying that Tranzbyte expects to announce its new choice of lead dispensary locations within the week.
“While it would have made some sense to have our premiere location close to the Tranzbyte main offices, we will treat this as an opportunity to place our machines within states that possess a more open regulatory environment,” Tranzbyte president, David Gwyther said, in a terse written statement.
No Specifics
It appears that some industry experts, who were unimpressed by the Tranzbyte’s first announcement, were right to dismiss it as just more hype backed with very little substance.
That’s because buried deep within the first glib PR release, Tranzbyte’s President David Gwyther would not commit to a date when the first medical-medical marijuana vending machine would actually be up and running.
“We expect the arrival of our first machine within the next few weeks,” Gwyther said in a written statement. “Originally, our first automated dispensary was slated for delivery by the end of 2013. However, enhancements and refinements of the machine's capabilities in November and December caused Tranzbyte to roll back the arrival date about a month,” he added.
On Feb. 11, ERBB share price closed at 2 cents, unchanged from the share price at the close of the previous day.
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Positioned To Grow
Colorado Springs, Colo-based Advanced Cannabis Solutions (OTCQB: CANN) has two strong practical points going for it: It's headquartered in the middle of one of the first, vibrant legal-marijuana marketplaces in the country and it's just been approved for a major line of credit.
These two elements are essential for the company to be able to build and equip the facilities it wants to rent to cannabis growers, which by the way, certainly fits the criteria of being a practical and promising product or service.
In Colorado alone, the medical marijuana market is estimated to be $350 million in size while the legalization of recreational marijuana could expand that figure to over $500 million in 2014 by some accounts. These figures are significantly larger throughout the United States. Some analysts estimate the total market at between $10 billion and $120 billion per year in size, depending on the success of various legalization efforts and the components included in the estimates.
Just Got New 30-Million Credit Line
On Jan. 21, Advanced Cannabis Solutions announced that it had established a $30-million credit line.
According to a release, Advanced Cannabis Solutions signed a definitive agreement with Full Circle Capital Corp., a closed-end investment company. The agreement provides that the investment fund will initially provide $7.5 million to the Company in the form of Senior Secured Convertible Notes, subject to certain conditions. An additional $22.5 million can be borrowed by Company with the mutual agreement of the Company and the investment company.
At least 95% of the loan proceeds will be used to acquire properties, which the company consistent with its business plan, will lease to licensed cannabis growers.
"The six-year loan will be secured by real estate acquired with the loan proceeds, and will require interest-only payments at a rate of 12% per year," the release explained, outlining the agreement.
On Feb 11, CANN's share price closed at $12.05, down 95 cents from its closing price of $13.00 the previous day.
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