Over the last several weeks there has been a lot of chatter about a boom that the emerging Marijuana industry could create. People see major advances and changes not only in the medical and recreational sectors but also in the financial sector. Authors and bloggers are comparing these times to the eras of the "Gold Rush" and " The End of Alcohol Prohibition". There are several companies that are making noise in this sector. Let us outline a few of them.
Medical Marijuana, Inc. (OTCPK:MJNA)
This company based out of San Diego, California, was founded in 2009. It has five holdings or subsidiaries that specialize in manufacturing and creating products from Cannabinoid extracts and Hemp plants. The details of their products can be found on their website and are out of the range of our current discussion.
Their most profitable subsidiary, Red Dice Holdings, LLC, owns the formulae, equipment and extraction processes for hemp oil based products. Their initial license apparently went to Dixie Elixirs, which makes a variety of these products, and has several branches and products in stores throughout the United States. On March 1st, MJNA announced that its subsidiary Phytosphere Systems LLC had entered into an agreement to sell certain of its assets to Cannavest Corp, believing that this transaction would eliminate the capital commitment required by MJNA to develop and produce raw materials, while at the same time affording a stake in Cannavest Corp. On March 7th KannaLife Sciences, inc. a phytomedical company, announced the entry into Series A financing that was led by MJNA and Cannavest Corp. MJNA also announced that it will be stepping up its presence in Europe, Canada and the Caribbean.
There were a few articles that caused the stock to dive after the initial surge it had in the first two months of 2013. If the management can address these concerns in a timely fashion, along with the expectant first quarter results, this could be good play in the marijuana market.
Creative Edge Nutrition, Inc. (OTCPK:FITX)
On March 25th 2013, this Michigan based nutritional supplement company announced its entrance into the medical marijuana sector. This company which focuses on health based nutritional products plans to acquire licenses and brands to capitalise on this growing sector. They plan to launch products which will be made in GMP-certified and FDA-approved factories.
The company plans to use hemp protein powder and chia seed in their nutritional supplements. These alternatives are rich in protein, dietary fiber and Omega fatty acids; which would add to the nutritional benefits of their products. The company has a new line of products ready for launch in April 2013 and thus felt the Medical Marijuana market was a natural progression.
It is the only company in this sector to announce a dividend. On March 27th, 2013, the company announced a 1.2:1 forward split dividend. In addition the company generated $2.5 Million in revenues last year. With its current market cap of $3.7 Million, it is clearly undervalued and seems to be a good buy, with sales expected to rise, given the introduction of the new product lines. The positive aspects? It is a known company in the health based nutritional product sector which manufactures under strict GMP guidelines at GMP certified and or FDA registered facilities.
SK3 Group, Inc. (OTC:SKTO)
On March 11th 2013, this company which used to focus on hospice services announced that it changed its business model to focus on the medical marijuana industry and acquired "Medical Greens". Medical Greens is said to provide licensing, management and logistics for medical marijuana collectives throughout California.
SKTO claims that Medical Greens has contracted over $30 Million in contracts within one week of its operations under the SK3 group. SKTO is said to have assembled a "state of the art" package for the collectives they manage, causing them to get the contracts.
A major influence is said to be Kevin Allyn, who was hired as the Chairman of the Board of Directors. He was a former Executive with King World Productions. His resume on Linkedin shows that he has been an expert and entrepreneur in the licensing, entertainment and sports business and has vast experience in managing multibillion-dollar industries.
It will be interesting to see how these companies fare in the era of this new booming industry. With unclear guidelines from the federal government and stiff competition popping from every corner; this race will be interesting. There are a few other companies not touched in this article but also making noise, that include TRTC, ERBB, PHOT, HEMP, and so on. This article is a brief outline of companies worthy of further research and does not go into their detailed business or financial models, which is out of the scope of this discussion.
Disclosure: I am long OTCPK:FITX, OTC:SKTO, OTCPK:MJNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.