Is the legalization of hemp the potential economic windfall some predict?
Hemp Inc.’s (OTC PINK: HEMP) CEO Bruce Perlowin was exuberant about the legalization of hemp in a provision of the new Farm bill Congress passed and President Obama signed into law last week.
“It’s an unbelievable moment in in the history of hemp,” Perlowin said, in a Feb. 10, 2014 interview on Bloomberg TV. “We are about to start a clean American Industrial Revolution.”
Perlowin added that the legalization of hemp would eventually generate billions of dollars.
But not everyone agrees with this rosy assessment of the potential economic value of hemp. A report by the Congressional Research Service written in 2013 stated the estimated retail market for hemp products was $500 million, but those numbers were prepared by the Hemp Industries Association.
Is Hemp Economic Potential Just So Much Hype?
According to the Fort Wayne Journal Gazette, a graph in the report estimated that hemp imports into the United States, including hemp oil, hemp seeds, hemp oilcake, raw processed hemp, hemp yarn and hemp fabrics amounted to only $11.5 million in 2011. Those who believe the economic benefits of legal hemp are just so much hype being cranked out by penny-stock companies, point to Canada, which permits farmers to grow hemp. Despite this, there was only 66,700 acres of hemp planted last year, a small crop for a product that is supposedly golden. This is minuscule, considering the total cropland in Canada now stands at almost 89 million acres or 53.1% of all its land, according to the Canadian government. Hemp detractors ask: If hemp was so lucrative, why aren’t Canadian farmers growing more of it?
Still, Las Vegas-based Hemp Inc. has already developed and is selling a wide portfolio of products made from industrial Hemp, including fabric, paper, insulation, plastics, cooking oil and even salad dressings.
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New Line of Vaporizer Products
Hemp Inc. is also developing vaporizers for the medical and recreational marijuana industry.
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.
On Feb. 11, Hemp’s stock volume soared to 191,614,520 shares, more than three times its three-month average volume of 58,065,878 shares.
Hemp’s share value closed at 16 cents on Feb 11, up 2 cents, from its close of 14 cents the previous day.
Cannabis Science Inc. (OTCQB: CBIS) stock volume continued to soar on Feb 11, with 59,634,257 shares changing hands, more than double its three-month average of 26,667,534 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.
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 17 cents on Feb. 11, down 1 cent from its closing price of 18 cents 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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Already Established in Prime Location
Hollywood, Calif.-based Medbox, Inc. (OTC PINK: 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.
New Patents Awarded
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 $27.00 on Feb. 11, down $1.50 cents from its closing price of $29.95 the previous day.
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