The simple reality is that every day the chances for the legalization of marijuana in the United States, either recreational or medicinal, is looking better, which means many nascent cannabis companies stand to benefit.
So far, 13 states are considering following Colorado and Washington’s example in legalizing marijuana possession for recreational use, according to Reason.com, while 16 states have joined the 20 states that have already legalized medical marijuana.
Do the math.
On Feb. 4 when Congress finally passed the long-debated farm bill, which included a provision legalizing the cultivation of hemp under certain circumstances, it sparked even more investor interest in marijuana penny stocks.
Tax Revenue Is Hidden Ally of Legalization
But the potential of much-needed tax revenue is the hidden engine behind this legislative movement to make cannabis legal. For example, in the first month of legal recreational marijuana sales in Colorado, retailers who shared their proprietary data with NBC News say they have collected $1.24 million in tax revenue. According to NBC, this is twice the amount of money collected in Colorado on alcohol during the same time period.
Here is an update on four marijuana stocks that stand to benefit mightily from the mounting momentum for marijuana legalization:
No. 1 - Cannabis Science Inc. (NASDAQ OTC: CBIS) stock volume reached Stratospheric heights on Feb 10, 2014with 53,883,149 shares changing hands, more than double its three-month average of 26,221,377 shares.
Its share volume is being pushed in part by the passage by Congress of the new farm bill this week, which includes a provision legalizing the cultivation and researching of hemp on a limited basis.
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.
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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 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.
Selling Equipment in Canada and Abroad
On Feb 3, Cannabis Science also 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 18 cents on Feb. 10, down 4 cents from its closing price of 22 cents the previous day.
No. 2 - Hemp Inc.’s (OTCPINK: HEMP) stock volume continues to skyrocket.
The Las Vegas-based is developing and selling a wide portfolio of products made from industrial. It saw its stock volume soar to 224,574,371 shares, more than four times its three-month average volume of 55,336,231 shares.
Hemp’s share value closed at 14 cents on Feb 10, down 5 cents, from its close of 21 cent the previous day.
Slow, Cautious Process
The new farm bill will allow universities and state agriculture departments to create industrial hemp growing programs. However, it only applies to states where industrial hemp farming is already legal under state law. These 10 states include Colorado, Washington, California, Kentucky, Maine, Montana, North Dakota, Oregon, Vermont and West Virginia.
If these research programs are fruitful, they could open the door for commercial hemp farming. According to the Associated Press, the US imported about $11.5 million in hemp products in 2011.
Good News for Hemp
Hemp stands to benefit greatly in the long run from such legalization because of the variety and strength of its cannabis-related products. The company is developing a myriad of products made from industrial hemp, including fabric, paper, insulation, plastics, cooking oil and even salad dressings. And now, it is developing vaporizers.
New Line of 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., a 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 latest move by HEMP through its subsidiary 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, no one can deny it is a positive development – especially in light of the new farm bill.
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No. 3 - As traction for the legalization of marijuana mounts, Growlife Inc.'s (OTCBB: PHOT) made an unexpected move to increase its authorized common stock shares by two-thirds.
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.
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.
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 10 with 39,077,014, shares changing hands, On Feb. 10, PHOT shares closed at 33 cents down 1 cent from its closing price of 34 cents the previous day.
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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 $.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.
Still Riding the Hemp Legalization Wave
No. 4 - The volume of Creative Edge Nutrition Inc.’s (OTC Pink: FITX) continued to soar on Feb. 10, with 213,030,048 shares changing hands, nearly three times its three-month average of 85,962,456 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. 10, FITX shares closed at 11 cents up 2 cents from its closing price of 9 cents the previous day.
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