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Perry Coleman
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Individual Investor with a MBA in Finance from Loyola University Maryland, and a Masters of Science in Computer Information Systems from The University of Phoenix in Arizona. Currently working in the defense industry. SA Required Disclosure: I am long MJNA.PK and write articles on behalf of... More
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  • MJ Market Watch: How Will You Invest 2 comments
    May 30, 2013 6:24 PM | about stocks: MJNA

    Watching the marijuana industry develop is like watching the pimply faced teenagers of the computer age grow into the technology titans of today's information age. The potential of the products that they produced was not fully understood by the masses, but that did not deter the young entrepreneurs. The underlying theme for investors was "only if I had gotten in early enough, I would be rich". Now a new industry is blossoming and the revolution of the marijuana industry offers a new opportunity.

    With computers, both the industry and product were in there infancy. With marijuana, the product is mature but the industry is in its infancy. Now for clarity, the underground market is very mature, but the legal framework of business operations in the industry has a long way to go.

    Companies like Medical Marijuana, Inc. (OTCPK:MJNA) and GrowLife, Inc. (OTC:PHOT) are a little further along on the maturity scale but are still trying to determine the path of least resistance in cracking the code to rapid growth in the face of federal prohibition. MJNA looks to surround the industry with products and services while GrowLife looks more to specialization which focuses on hydroponics growth applications for both small and large scale operations.

    But some are looking toward the smaller or less business savvy entrepreneurs as catalysts of growth for the industry. Industry advocates and angel investors (affluent investors that provide start-up capital for businesses) are reaching out to provide both the education, and when deemed economically feasible, the capital to launch businesses.

    Medical Marijuana Business Daily will be offing an educational seminar and networking event in New York City [NYC] on June 11th to promote expansion of the cannabis industry on the east coast. Angel investors Troy Dayton, CEO of ArcView and Brendan Kennedy, CEO Privateer Holdings, Inc. will be on hand, as well as others, to offer guidance on securing investment dollars. ArcView is building an investor network of those looking to invest 50K or more, so if interested you should visit its website.

    But if you don't have or want to plunk down $50K, there are plenty of other stocks in the industry that may be a good fit for your investment portfolio.

    Medical Marijuana, Inc.

    In case you missed it, it was noted in that CNBC's Steve Grasso is long on Medical Marijuana, Inc.The following disclosure was posted on CNBC's website showing the Commentator and Financial Analyst beinglong MJNA.

    (click to enlarge)

    Grasso's position is a very good sign as his profession offers a degree of creditability to his investment decisions. It's difficult to find those in a public forum that are willing to "put their money where their mouth is" on a micro-cap. It's better to look to professionals for investment cues than more nefarious sources.

    The stock has been under some pressure because the recently released financial reports revealed that the company hasn't collected any revenue or profit from its subsidiary Red Dice Holdings, LLC. Red Dice owns the Dixie X Synergy Brand and the Dixie Elixirs brand whose product lines include those products that have THC in them.

    It's important to note that not collecting profit does not forgoentitlement. MJNA is clear to note in its financial statement, as shown below, that it has not received any revenue or profits "to date"which indicates that at some point that it will. This will most likely occur when federal laws catch up with state legalization initiatives.

    (click to enlarge)

    I like to think of this as a 401k accruing for the company and investors. If you touch it too early, you will incur a penalty, but when the time is right, distributions can be had. The company is trading around $0.15 per share. This would likely be much higher with visibility of this revenue stream. The company recently reported positive resultsin its research demonstrating that Cannabidiol [CBD] and other Phyto-cannabinoids stops cancer from metastasizing (spreading between organs). This should get the interest of Big Pharma!

    GrowLife, Inc.

    GrowLife, Inc. is one of the few fully reporting companies in the industry. As mentioned above, the company specializes in hydroponics and has no exposure to THC. The CEO, Sterling Scott was recently featured on MoneyTV where he discussed the company's earnings results. Look under "Company Updates Week 20" for Mr. Scott's interview. The company recently reported a 725% increase in quarterly revenue and is currently trading about $0.04 per share. I think this stock is extremely undervalued and revenue will continue to increase as legalization expands across the U.S.

    MJ Market Watch News Bites

    1. Tranzbyte Corporation (ERBB.PK) - Tranzbyte recently announced that it is acquiring YO! Debit Card Network. The company will be rolling out a "YO21!" card to provide patrons over 21 with a way to make purchases from its proprietary automated dispensaries. The stock is trading around $0.004 per share and was up 4.65% at the May 28ths close.
    2. Marijuana users may reduce the risk diabetes and increase the levels of high-density lipoprotein (the good cholesterol). More information can be found here on the subject. This could provide an unrealized source of revenue for companies such as Cannabis Science, Inc. (OTCPK:CBIS), MJNA and Medbox, Inc. (OTCQB:MDBX). The first two companies would benefit through product sales while Medbox would benefit through point-of-sale distribution of those that self-medicate to go beyond their doctors recommendations.
    3. Illinois will likely become the 20th medical marijuana state if Governor Pat Quinn signs recent legislation passed by the state senate. The governor has recently stated that he is "open-minded" regarding the issue. Illinois could soon be followed by Ohio. As more and more states legalize, the federal government will feel increased pressure to act.

    As you can see, there are lots of exciting things going on in the industry. There are a tremendous amount of opportunities, but there are also a lot of risks. The regulatory environment poses many obstacles and micro-caps are inherently risky. But remember, no risk, no reward.

    Disclosure: I am long OTCPK:MJNA, OTCPK:CBIS, OTC:PHOT.

    Stocks: MJNA
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Comments (2)
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  • DeepBlueSea
    , contributor
    Comments (260) | Send Message
     
    Excellent info to know about. Thanks Perry. I wonder what Jim Cramer thinks about the pot stocks, :)
    1 Jun 2013, 12:01 PM Reply Like
  • Perry Coleman
    , contributor
    Comments (581) | Send Message
     
    Author’s reply » Correction: The last sentence in the last paragraph the reads:

     

    "The company recently reported positive results in its research demonstrating that Cannabidiol [CBD] and other Phyto-cannabinoids stops cancer from metastasizing (spreading between organs). This should get the interest of Big Pharma!"

     

    Should be changed to read:

     

    "The company recently reported positive results about research demonstrating that Cannabidiol [CBD] and other Phyto-cannabinoids stops cancer from metastasizing (spreading between organs). This should get the interest of Big Pharma!"
    1 Jun 2013, 02:20 PM Reply Like
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