While there has been a lot of excitement surrounding the medical-marijuana industry recently, at the end of last week the hype softened as share volume and values flattened.
On Mar. 7, Advanced Cannabis Solutions (OTCQB: CANN) stock volume continued to soar, with 480,532 shares changing hands, more than twice as must as its three-month average volume of 197,957 shares. However, the Colorado Springs, Colo-based company that leases growing space and related facilities to licensed marijuana business share price lost most of the ground it gained earlier in the week, closing at $34.50, down $4.60, or 11.65%, from it closing price of $39.50 the previous day.
While there is no new news coming from the company negative or positive, some industry experts believe the downtick in its share price is the result of investors taking a deep breath and getting their bearings on the new medical-marijuana industry.
Good News Reaches Critical Mass
Up until now Advanced Cannabis Solutions stock had been on an upward trend, being fueled by a spate of positive news coming from the company along with its solid business plan backed by real estate investments.
On Feb. 20, Advanced Cannabis Solutions said it has signed an agreement to provide comprehensive consulting services to a significant investor group in Canada. This group is involved in the start-up and operation of a large cannabis production operation serving the Canadian medical marijuana marketplace. The contract has a minimum duration of six months and a potential value in the low six figures.
In addition, the company that is headquartered in the middle of one of the first, vibrant legal-marijuana marketplaces in the country has recently been approved for a major line of credit.
These two elements are essential for Advanced Cannabis Solutions to be able to build and equip the facilities it wants to rent to cannabis growers.
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.
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.
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Hemp Inc. to Help Green Concepts Source Hemp Products for Its Web Site
Meanwhile, on Feb. 27, Hemp Inc.'s (OTCPINK:HEMP) wholly owned subsidiary, the Industrial Hemp and Medical Marijuana Consulting Co. Inc., signed an agreement with Greene Concepts Inc. (OTC:LKEN) to provide professional consulting services for its new Hemp Web portal.
The thrust of the consulting agreement will center on Hemp’s subsidiary helping source hemp-based products, including hemp-based ink, hemp paper and other industrial hemp related products for Green Concept’s “hemp-centric” website, the Hemp Exchange (http://hemp-x.com).
Access to Many Hemp Products
“Hemp, Inc. has been evaluating products in this industry for the last 5 years,” said Hemp’s CEO said Bruce Perlowin. “We have a vast resource of companies that produce hemp products that can enhance the Hemp Exchange portal and we have close relationships with these companies,” he added, in a written statement.
This is just the latest move by Hemp to expand its footprint into various sectors of the vast legal-hemp/marijuana business.
Developing Vaporizer Products
On Jan. 28, VaporBrands International, Inc. (OTC Pink: VAPR) announced it has entered into a Letter of Intent to form a joint venture with Marijuana Inc. , another wholly-owned subsidiary of Hemp.
Under terms of the proposed joint venture, Marijuana, Inc. will assist VaporBrands with the development and distribution of specialized marijuana vaporizing products to be sold primarily through existing medical marijuana dispensary networks.
In addition, VaporBrands and Marijuana, Inc. have agreed to research, develop and distribute vaporizer products specifically for the use of Hemp Oil in natural medicine. Marijuana, Inc. has also agreed to assist VaporBrands in expanding the retail distribution of its current and future electronic nicotine based cigarette products.
This is yet another move by HEMP through a subsidiary that certainly strengthens its position in the marketplace. It also filled a much needed gap in its vertical offerings. While it’s too soon to measure how this will affect HEMP’s overall revenue, it is a positive move.
On Mar. 7, HEMP closed at 11 cents, down 1 cent from yesterday’s close of 12 cent.
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Promotes Products over the Weekend
In other news, Medical Marijuana Inc. (OTC PINK: MJNA) showcased its cannabidiol-rich industrial hemp oil products at Natural Products Expo West March Mar. 7 to Mar. 9, which attracted an estimated 60,000 attendees
Other than this, the San Diego holding company hasn’t made any major announcements since Feb 5 when its subsidiary reported that it was expanding the global sales base of its industrial hemp-based cannabidiol (CBD) oil.
Still, Marijuana’s continues to employ a formidable diversified strategy in order to establish a foothold in this burgeoning industry.
For example, on Jan. 31 Medical Marijuana 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 Mar. 7, MJNA share price closed at 30 cents, unchanged from its closing price of the previous day.
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Cannabis Science to Get $1 Million in New Financing
Finally, a developer of cannabis-based pharmaceutical products Cannabis Science Inc. (NASDAQ OTC: CBIS) announced Feb. 20 that it has negotiated $1 million in new financing.
According to Cannabis Science, it is raising the $1 million through private placement. The pricing is set at $0.25 per share for 144 restricted shares coupled with a one-year warrant for $0.50 per share to comprise a complete unit offering.
“The financing is being headed by affiliates and associates followed by an assorted group of individuals that have shown a strong interest in moving Cannabis Science's projects forward immediately,” the press release stated. “Initial commitments exceed $100,000.00 and the Company has received the first $50,000.00,” it added.
On Feb. 13, the company announced its new partnership with Michigan Green Technologies, LLC formed to actively lobby for the legalization of hemp and cannabis in President Obama’s home state of Michigan.
Robert Kane, Director and CFO of Cannabis Science, stated, “Michigan has always been an important market, and with a population twice the size of Colorado's, we see many opportunities ahead through our new venture with Michigan stakeholders."
Cannabis Science has been lobbying hard for the decriminalization of cannabis research, which is definitely makes it a player that is serious about developing products in a timely and safe fashion.
Before it began its focus on Michigan, Cannabis Science has and continues to systemically lobby Congress.
Lobbying Hard to Make Cannabis Research Possible
The company's government relations team lead, Rick Blake, is working with the U.S. House of Representatives' Cannabis Caucus to ensure that President Obama signs an Executive Order to decriminalize cannabis research. This is one of the bipartisan initiatives of the members of the Cannabis Caucus being facilitated by Cannabis Science. In contrast to many other countries Cannabis Science believes the regulatory landscape of the United States creates unreasonable restrictions on the ability of scientists and physicians to explore promising patient-driven research involving cannabis and cannabinoids.
“Thousands of patients are awaiting the President's action to set cannabis research free,” said Director and CEO of Cannabis Science Dorothy Bray, in a Jan. 29 written statement.
The Colorado company announced on Jan. 16 that it is spearheading an observational clinical research study in 2014 focusing on the use of cannabis and cannabis-based products to treat a variety of medical conditions.
“We will work with full authorization of the regulatory authorities and, most importantly, with the approval from patients,” said Cannabis Science President Robert Melamede.
But in addition to lobbying, Cannabis has made some pretty savvy vertical product moves as well.
Selling Equipment in Canada and Abroad
On Feb 3, Cannabis Science announced it would be partnering with MDS, a subsidiary of Medbox, Inc. to sell and distribute equipment to be used in the medical-marijuana industry. Under the terms of the agreement Cannabis Science has a 50/50 gross profit exclusive on any and all MDS equipment sales in Canada and other select markets, according to the release Both Cannabis Science and MDS have multiple opportunities in Canada based on recent developments with medical cannabis in that market. Other countries will follow pursuant to the agreement as Cannabis Science moves forward aggressively in Europe and South America.
CBIS share price closed at 15 cents on Mar. 7, down 1 cent from its closing price of 16 cents the previous day.
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