Bright, shiny and new marijuana stocks with various sundry visions of exploiting the much anticipated legal- marijuana industry are going public every day, with enchanting narratives that can swoon even the most hardcore investors.
But here is a preliminary litmus test a potential investor can apply to any of these enticing cannabis stocks that will enable him to focus on their real-world potential:
Does the company being considered offer a product or service that is (1) practical, (2) promising and (3) is the company already positioned to hit the ground running with these products or services?
Business Longevity and Promising Products
One of several companies that makes and sells products that have practical promise in the legal-marijuana industry is AVT Inc. (OTC PINK: AVTC).
The Corona, Calif.-based company makes vending machines that can be used to dispense medical marijuana. However, its greatest asset is the fact that AVT’s been a successful and growing business for 10 years. In addition, some industry experts believe its main product line is ready-made for the marketplace.
"We have a variety of innovative systems that we provide to the legal marijuana industry," AVT’s CEO James Winsor, said in a written statement on Jan. 30. "From biometrically secure marijuana storage and dispensing systems (sometimes referred to as 'marijuana vending machines'), to sleek automated units that sell a variety of e-cigarette vapor pens, AVT is well positioned to continue to grow in this dynamic, rapidly expanding market," he added.
Already Successful Vending-Machine Company
Unlike so many new players entering the cannabis market, AVT is already a successful vending-machine company selling various foods and other products such as e-cigarettes. It is also used to getting its machines to comply with any federal or state regulations. This experience gives AVT a step up over other newer players in this segment.
"We can bring machines into compliance with the new regulations," AVT’s CEO Winsor, said in a Jan. 9 written statement addressing the regulation issue. "Or we can custom create a new solution for any operator, that includes our patented wireless connectivity, cashless payment systems, and a high definition interactive display that not only provides the consumer with nutritional information, but also entertains, engages, and upsells," he added
On Jan. 31, AVTC's share price closed at $3.90, up 8 cents from its closing price of $3.82 the previous day.
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Location, Location, Location
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. where 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 Jan. 31, CANN's share price closed at $14.25, up 20 cents from its closing price of $14.44 the previous day.
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Hollywood, Calif.-based Medbox, Inc. (OTCPINK Markets: MDBX), a maker of patented, self-service, identity-verifying medicine dispensers, believes it is perfectly positioned to cash in on the burgeoning medical marijuana market in California.
"Legal marijuana is one of the most rapidly expanding medical markets in the U.S., projected to exceed $3 billion in 2014," said Dr. Bruce Bedrick, chief executive officer, Medbox, Inc., in a written statement. "This rapid growth is creating significant opportunities and Medbox is positioned as the first mover and clear industry leader in this burgeoning sector. Our offerings include sophisticated and comprehensive consulting services for dispensary permit applicants and cultivators, as well as offering dispensing technologies and vaporizers. The breadth and depth of our offerings position us to strengthen our leadership role and we felt it was an appropriate time to retain proven IR counsel to help us raise our visibility in the investment community, communicate our investment thesis and broaden our shareholder base," he added.
Medbox’s dispensers even have the precaution of requiring a finger print check for identity. The company hopes to ultimately place these dispensers in the thousands of clinics and approved facilities that it hopes one day will dispense medical marijuana.
At the same time, Medbox is developing and patenting even more practical products for the cannabis industry.
On Jan. 21, Medbox announced that it has expanded its intellectual property portfolio with the confirmation that it has been awarded two additional patents for its Vaporfection brand of products. The announcement was made in conjunction with a comprehensive shareholder update, and Form 10 filing with the Securities and Exchange Commission.
The patents, awarded to the company's wholly owned subsidiary, Vaporfection International, Inc., specifically relate to:
- Vapor Glass™ technology, which features the use of laboratory grade glass encased heating element positioned in the center of the laboratory grade glass heating chamber air pathway. This unique Glass on Glass design results in a superior quality and efficient air/heat flow vapor, which ensures that nothing but the purest convection heated air enters the plant material, which releases the purest, naturally flavored and virtually odorless vapor into the users’ respiratory system. This method is unlike most vaporizers that apply conduction heat to the plant material using ceramics, metals and other possible contaminates in the air pathway.
- Vapor Sense™ technology, which features a touch screen interface linked to an automatic temperature sensing control system. The technology uses a digital microprocessor temperature controller directly connected to a thermo coupling temperature sensor in the heating chamber. It also incorporates a fixed temperature setting option, auto shut-off, and cool-down safety features.
MDBX share price closed at $36.00 on Jan. 31, down 89 cents from its closing price of $36.89 the previous day.
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Plan to Reduce Research Restrictions
Cannabis Science Inc. (NASDAQ OTC: CBIS) is continuing to lobby hard for the decriminalization of cannabis research, which is definitely a check mark on the practically ledger.
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 that is developing cannabis-based medicines 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.
CBIS share price closed at 0.179 cents on Jan. 31, down 0.0015 cents from its closing price of 18 cents the previous day.
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