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I trade mainly on sentiment & leave the more technical aspects to other Wolves, but I do chart. I have a group of traders that pool resources & $$$ to make the #Wolf-Fund. My persona on twitter @wolfofweedstreet only discusses Marijuana related stocks. I Am the Wolf of Weed Street and... More
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  • Part 2 GBLX: Risks & Rewards...

    GrowBLOX Sciences Changing the landscape for the Marijuana Industry

    There's no doubt that the marijuana industry is booming with new opportunities both from a business development stand-point and from an investment approach. The current market landscape has opened up many options but the bottom line is this: if dispensaries can't get product, IE marijuana, there's really no market to be had. More importantly for states like New York, Florida, and Illinois which have all just put medical marijuana plans in place, the necessity to have a consistent medical grade product is paramount to the entire market within those states.

    After looking through the industry, I've found that there is, in fact, a company that focuses solely on medical grade marijuana production in order to deliver an effect and consistent strain with each and every crop. GrowBLOX Sciences, Inc. (OTCQB:GBLX) is a "research and biotechnical development company setting the gold standard for manufacturing medical cannabis producing technology, as well as discovering, developing, and commercializing proprietary strains of cannabis to treat a broad range of serious medical conditions." Based on its unique technology, individual proprietary cannabis strains for treatment of specific medical ailments, and the company's four revenue drivers, GrowBLOX has the ability to become a key player in the industry.

    Early Foothold in the Growth and Dispensary Market

    To date, GBLX has begun to build a footprint within the medical MJ space in several key states. First, in May the company was up for approval as one of Nevada's "elite 18"; only a little more than a handful of companies that were granted special use permit licenses for medical marijuana dispensaries. The GrowBLOX chamber has gained the attention from the marijuana community for its ability to successfully produce consistent strains of medical grade marijuana in a fully enclosed, climate controlled medium.

    GrowBLOX has remained steadfast in the companies approach to build revenue through in state partnerships similar to the operations in Nevada via GB Sciences, NV. As of recent, GBLX has applied for 2 additional licenses within the state and if approved, will have dispensaries in high traffic areas within the Las Vegas market, which will utilize the GrowBLOX technology to provide a consistent product across the state to thousands of residences and millions of tourists who fall within its boarders.

    In addition to Nevada, GrowBLOX has also begun to establish itself within the Florida market via a wholly owned subsidiary, GB Sciences Florida, LLC. According to the company in a recent press release discussing the move, GrowBLOX Sciences recognizes Florida's high standards for quality in medical marijuana cultivation as a perfect match for their GrowBLOX™ cultivation technology. GrowBLOX CEO, Craig Ellins, said, "In an effort to safeguard Florida's medical marijuana patients, Florida's legislators have crafted some of the country's most stringent quality standards when it comes to the safety and efficacy of the medical marijuana grown in their state. They want medical solutions, and that's exactly what our GrowBLOX™ does, it makes medicine."

    Florida will soon hold a vote this November where voters will be able to have their chance at being part of Florida's approval of the Florida Right to Medical Marijuana Initiative, commonly known as Amendment 2. State projections of sales already range from $138 million to $5.6 billion, with projections of tax revenue ranging from $8.3 million to $338 million based on the number of medical marijuana patients, the amount of pot they may use and the price per ounce. IN any case, the market for medical marijuana in Florida could become a strong revenue driver for GBLX if Amendment 2 passes.

    A third highlight that continues to support GrowBLOX as a market disruptor is recent press that was released Friday afternoon (7/25). GBLX announced the execution of a binding Memorandum of Understanding with LaurelCo, LLC, an Illinois limited liability company formed to pursue the acquisition of both cultivation and dispensary medical marijuana licenses in the state of Illinois thus allowing GBLX its entry into a 3rd state. Through the agreement GBLX will provide the growing chambers to Laurel in exchange for a 10% equity interest. Additionally, after the Illinois company opens "one or more dispensaries", GrowBLOX will not only begin to receive an accelerated payback of actual costs but it will also realize a 10% royalty from products created in the chambers and sold by the LaurelCo, LLC licensed entity thus immediately achieving several revenue streams within the Illinois market.

    "With the formalization of our relationship with LaurelCo, LLC in Illinois, we are setting a standard for our growth into states in which GBLX does not have resources in place to operate a medical marijuana business by seeking out great partnerships who will operate the local business and be part of our nationwide plans."

    -Craig Ellins, CEO, GBLX

    So just on the product side, GrowBLOX has an open channel for revenue from 3 states just beginning to legalize medical marijuana. Since making these announcements, GBLX share price has increased from lows of $1 a little over a week ago, to highs this past Friday of $1.25 just before closing the week at $1.20. The marks a 20% rebound in less than 2 weeks and could be the first indication of positive sentiment beginning to flood into the market once again.

    Financing Activities

    To sustain growth operations, GBLX has brought on Lazarus Investment Partners LLLP. Not only has this firm invested over $1Million into the company but as of July, Lazarus also purchased more shares in the open market and significantly higher prices that its original investment. Recent press shows that this company "has acquired an additional 269,632 shares in the open market for an additional $322,000 investment. Lazarus, which already holds a 3,000,000 share investment at a price of $0.50, averaged up their position acquiring 199,632 shares at $1.19, 50,000 shares at $1.21, and 20,000 shares at $1.20 over a three day period from June 30, 2014, to July 2, 2014." The fact that this investment firm is cost averaging up should indicate its opinion on where it thinks GB Sciences is headed in the future. Furthermore, the most recent shareholder update reveals that GBLX closed a $5 million private placement with institutional and accredited investors. The financing included warrants which, when fully exercised, amount to a $30 million financing. These warrants expire between 3 to 5 years depending on A or B warrants thus posing little dilution risk in the near term.

    Risk Factors of GBLX

    Market risk is an obvious factor here. Volatility in a small cap marketplace poses greater risk for long-term investors as compared to high frequency traders. In the case of GBLX, it has seen consolidation over the last 60 days going from a high price of $3.49 to a low of $1. I believe future operations of GBLX will determine the stock's to be more or less volatile. In addition to this, the company is both top-heavy in funding activities while not posting a single dollar in revenues. Obviously it is building the framework to begin generating revenues as soon as possible but in the interim, this is still a developing situation. Third, as with the marijuana market as a whole, state legislation poses probably one of the biggest risks for the company's success.

    If Florida's vote fails and Illinois does not pass its medical marijuana law, GBLX can say goodbye to the "potential market" and will only be limited to the select few medical users the current state laws allow. Finally, potential dilution also poses as higher level of risk for investors specifically. The company has obvious dealing with firms like Lazarus partners as well as other institutional investors. Should these backers decide to pull the plug so to speak, there are enough freely tradeable shares in their hands that it could potentially be disastrous to the share price. Just as an example, Lazarus Investment Partners holds a 3,000,000-share investment at a price of $0.50, a price per share far lower than the current market price. Assuming this firm is as savvy as diligence would suggest, this scenario probably wouldn't happen but it still poses a risk in the event that it does so investors should be completely aware.

    Conclusion

    GrowBLOX as a company has been working to become a market leader within the quickly growing medical marijuana space. Through several operating agreements between the company, its subsidiaries, and partner entities, GBLX has begun to establish a presence in several of the "up and coming" medical states who all have laws up for vote as it pertains to full legalization for medical use. Though there are several key risks that investors should pay attention to when undertaking their diligence, the fact remains that GrowBLOX has a system in place not only for streamlined cultivation processes but also for building & expanding into new markets. Based on these reasons, I believe GBLX and its technology to be market disruptors and allow the company to become potential market leader if and when these new states go online for legalized medical sale by the end of 2014 and into the beginning of 2015. This groundwork is a vital piece for GBLX and any marijuana company looking to realize increased revenues in the very near term. So for GrowBLOX, being first to market has been a key strategy to build the framework for its future endeavors within the space and in conclusion, I personally think that GBLX warrants further diligence.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jul 28 2:21 PM | Link | 2 Comments
  • GBLX: Planting Flags Now To Plant Seeds Later....

    Catalyst's and revenue streams are two very important drivers in the OTC as we have discussed many times on www.Wolfofweedstreet.com. A narrative it seems these days is just as critical as product, revenues and execution which is why I'm taking a closer look at GBLX. With four separate revenue drivers, a unique technology, an individual proprietary cannabis strains and a presence within a growing list of states, GrowBLOX Sciences, Inc. has been garnering the attention of the investment community over the last few months. Not only has GBLX seen explosive highs nearly $3.50, but the recent pullback to lows of $1 may have opened an opportunity for new investment. After watching the trading from Friday's afternoon session, a deeper look at the company and the current industry climate are the main reasons to keep an eye on this company heading into the fall.

    The company's technology has been built to set the standard for manufacturing and medical cannabis producing technology and has it positioned to become a key player in the industry. One of its major revenue drivers would be partnering with in-state growers to help them cultivate cannabis in order to that meet growing patient needs; which is why GBLX has entered into several key markets:

    Nevada

    GBLX became one of the "chosen 18" that were granted a special use permit licenses for medical marijuana dispensaries through its local partnership, GBS NEVADA, LLC. The Company's Fort Apache location is the only dispensary to service the needs of patients in that area, giving GBLX a major advantage in the Nevada market.

    Florida

    Mid July marked GBLX's entry into the Florida market through its wholly owned subsidiary, GB Sciences Florida, LLC. The National Cannabis Industry Association estimates medical marijuana will be a $785 million industry in Florida with multiple economic opportunities. Governor Rick Scott signed a law on June 16 allowing for the limited use of a special strain of marijuana called "Charlotte's Web" to treat those suffering from epilepsy, cancer and amyotrophic lateral sclerosis (ALS), known as Lou Gehrig's disease and this is just the first step for the state. Florida will have the opportunity to enact a comprehensive, workable medical marijuana law this November by voting yes on Amendment Two. Another thing I would like to add is that I assume GBLX is two steps ahead when it comes to strains similar to Charlottes Web just as insiders and master growers are. Charlottes Web is often discussed mainly because it gained quick noteriety, but it is important to know that with regards to medicine for ailments above it is similar to the Iphone 4.

    Illinois

    GrowBLOX is currently involved in the application process for licensing in Illinois. As far as timing goes, GBLX has acted quickly in preparation of the potential move as state lawmakers have set final rules to allow medical marijuana in Illinois. This will open the door so to speak for patients to apply for medical marijuana ID cards by the fall and possibly apply for legal cannabis by the spring. The state intends on approving a total of 21 licenses for cultivation and 6o dispensaries by September of 2015.

    Puerto Rico

    The Company opened its subsidiary GB Sciences Puerto Rico, Inc. and is monitoring the island's pending legislation to legalize medical marijuana. The Puerto Rican Senate is currently discussing the legalization of marijuana for medical use and its cultivation and so far SB 517 has passed senate in a 14-12 vote now moving on to the House; it would decriminalize up to 14 grams of marijuana. As far as legalization of medical, Representative Carlos Vargas introduced House Bill 1362 to legalize medical marijuana and regulate its sale, possession and consumption. During the public hearings on House Bill 1362, most groups testified in favor of medical marijuana and argued similar cases as other states moving forward with a motion to legalize the medical use of the drug identifying that reform is needed to tackle drug addiction and high incarceration rates.

    With GBLX already set up in Nevada and already establishing a presence in 3 more areas positioned for some type of legalization, the company has significantly entrenched itself as a driving force within the industry as a whole. Beyond the cultivation aspect, the company has also put into place, key relationships with banking and inside investment. Lazarus Investment Partners LLLP, has acquired an additional 269,632 shares in the open market for an additional $322,000 investment. Lazarus, which already holds a 3,000,000-share investment, which actually averaged UP their position in GrowBLOX. I'm sure it's not hard to see that by averaging up, the firm believes that this is an undervalued investment under the $1.20 mark.

    Furthermore, and quite possibly even more important is a two-fold chain of events: 1. GBLX secured a letter of intent with First Security Bank of Nevada for the purpose of managing the currency and banking flow of The Company's operating facilities and 2. The House voted Wednesday (7/16) in a 236-186 win in support of making it easier for banks to do business with legal pot shops and providers of medical marijuana. This was a decision that rejected a move by Rep. John Fleming, R-La., to block the Treasury Department from implementing guidance it issued in February telling banks how to report on their dealings with marijuana-related businesses without running afoul of federal money-laundering laws. The Treasury guidance was intended to give banks confidence that they can deal with marijuana businesses in states where they're legal. For marijuana cultivation companies like GrowBLOX in connection with its LOI puts GBLX in place to immediately benefit from signed LOI moving forward with full access to banking operations as it stands today.

    Sentiment from the quickly growing millennial generation is in clear support for full legalization. Americans age 18 to 29 oppose the federal prohibition of marijuana, according to national polling data compiled by the Reason Foundation. In addition to this, of those polled, only 14 percent said that someone who consumes marijuana should go to jail. So as more states continue to move toward some form of legalization not only has GBLX positioned itself ahead of these motions through subsidiaries and partnerships, but it has also been incredibly active in providing the necessary quality that many medical programs are looking for.

    Although GBLX has gone through a consolidation over the past week, it looks like interest has built once again following announcements from Capitol Hill. The companies continued growth in additional markets like Illinois and Florida should attract attention & volume, as such this is going to be a stock that I will be watching very closely; especially after the late afternoon activity from Friday. As always do your own DD and invest with caution as the magic OTC ATM is many times "out of order" in the summer months for the foolish investor...

    The Wolf

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jul 21 2:35 AM | Link | 4 Comments
  • PR's For Show & Real Companies That Grow: A Tale Of A Few MMJ Stocks

    ***This is purely my opinion and not in any way, shape or form an endorsement to buy or sell any of the mentioned securities. It is merely here to be cross referenced whenever possible***

    We have all heard the whispers of companies getting ready to cross that mythical "Green Line" to start growing weed or "flowers" if you want to sound like a snob. The problem thus far have been plenty; One can chalk it up to state bureaucracy, no execution of Company vision, inability to raise capital, etc etc. While there has been movement on some fronts with a few of the OG's like TRTC in the medical Marijuana sector, for the most part it has been a bust or an outright attempt to blow smoke up a shareholders a$$. Even so new companies are emerging. GBLX (the story still unfolding & still needs serious DD) seemingly came out of no where to challenge TRTC in Nevada so to speak as publicly traded companies getting permits. QEDN a company I will get to later is flying under the radar big time & to my knowledge is the only publicly traded company with Weed growing in the United States.

    While there are many companies I like in this sector there are even more that I do not, but all are arranged in a 4 tier system. I won't give you some long winded & witty illustration of each tier, but they go as follows. Tier 1 is where I will take a nice sized position to a hold and accumulate with some minor trading with maybe 25-30% of my core for special breakouts etc. Tier two I would dip the tip or just trade in and out of on pure Momo and wait for the company to "say what they mean and mean what they say." Tier 3 is what I call "Dead Money," which means they will continue to slide for a while, remain stagnant & inevitably suck the life out of holders. Tier 3's are stocks people marry and often think will turn the corner, but fail to see fundamental issues with the stock like share count or business model that can be executed in a real world of set parameters. Tier 4's are summed up with two words and usually begin with a four letter word and ends with the word "NO." Some of these tiers border each other as you will see below, but these aren't absolutes and each case is different as many variables can influence any situation. As such investors should always adjust accordingly based on risk levels they can endure.

    In Canada you have a few companies that are either growing like ATTBF (Tier 2), Tweed (Tier 2/3) or trying to grow weed like FITX (Tier 3/4). There are other notable companies in Canada doing some interesting things like SPRWF (Tier 2) & CANLF (Tier 2 mainly, but 1 could happen sooner than later), but these two need their own instablog as well as more extensive DD.

    With regards to the Canadian plays I would like to focus on Tweed & FITX as if I mention ATTBF in the same paragraph I might get shot.

    Word on the street is that Tweed is having some major issues with their facility. If the whispers are true they are hemorrhaging money and having serious issues with their crop. To my understanding they are going through master growers like Leonardo Dicaprio goes through Victoria Secret models. Yes they are growing, but just growing a crop does not justify their current market cap of $111,000,000 in my eyes. Their facility (an old Hershey plant) is not being used at full capacity. Currently I'm hearing they are only using about 1600 square feet to grow. I am also hearing that they only have 1000 clients, but were expecting something like 10,000. There's also the 4.6 million shares that GMP Partners have as part of $15m in financing that will become unrestricted in 2 months at $3.20 a share (Tweed closed at $2.78 Friday 6/20).

    FITX is a saga that many are familiar with and many people have covered it much better than myself like Chris Parry from Stockhouse.com (here's an article http://www.stockhouse.com/news/newswire/2014/05/16/medical-marijuana-update-creative-edge-fitx-ceo-answers-detractors). The scoop is that there are literally hundreds of millions of shares becoming unrestricted each month, a Canadian License that is non existent at the moment and a facility that will take millions of dollars as well as municipality approval for power/water/ETC that will be months out. The thing we have noticed and tracked in our chat rooms at www.wolfofweedstreet.com is that for the last month at the beginning of some days and the end of those days there appears to be a little sell offs. PPS dips early morning then gets bought up. If you look at a 3 month chart there have been a few big sell-offs as you can see by the image below.

    Now this could be normal profit taking, but it could also be the shares that are becoming unrestricted per month being sold by insiders as seen below. Its not unreasonable for them to take profits regardless; that's why people become investors in the 1st place.

    In the United States we have TRTC which has just been given a special use permit for Medical Cannabis cultivation & production. The great thing about TRTC has been that they have revenue coming in from Edible Gardens. They also have a much beloved CEO in Derek Peterson who continues to execute the business Model. I remember when I first heard about TRTC last August and everyone was saying that by New Year they would be growing, but that's ok because the longs over there are realists and nothing moves as fast as the investment community wants it to. Seeing the follow through is important to investors and now discussions that have been had a year ago are materializing.

    If that seemed like I was going off on a tangent my point is that licensing, bureaucracy, red tape, and funding all take serious amounts of time. Wouldn't it be great if there was a publicly traded company already growing MMJ here in the United States that we wouldn't have to wait for? What if I told you that there already was one? This brings us to QEDN.

    QEDN recently acquired Emerald Med Farms, Inc. as its wholly owned subsidiary as a marijuana cultivation company

    http://www.emeraldmedfarms.com/

    Emerald Med Farms, Inc. has a marijuana crop in the process of maturing that is expected to be ready within the next 3 to 4 weeks for harvesting. The current crop is estimated to yield between 3 and 4 pounds per plant and, upon the successful harvesting of these strains of marijuana, the product will be distributed through a Cooperative of California medical dispensaries. The was announced on June 4th in this PR:

    http://www.otcmarkets.com/stock/QEDN/news/QED-Connect-Inc--Completes-Filings--Growing-First-Marijuana-Harvest?id=82089&b=y

    The marijuana plants are from two strains: 1) The OG Kush Strain which was originally from Northern California and has quickly become known around the world for its distinct aroma and strong effects. The OG Kush strain is one of the most popular medical marijuana strains grown and sold by dispensaries today. 2) Sour Diesel Strain which is named after its pungent, diesel-like aroma. This fast-acting strain delivers energizing, dreamy cerebral effects that provides stress, pain, and depression relief and provides long-lasting relief making it a top choice among medical patients.

    Emerald Med Farms, Inc. is registered as a Domestic Corporation with the state of Nevada as can be confirmed within the NV SOS database:

    http://nvsos.gov/SOSEntitySearch/CorpDetails.aspx?lx8nvq=H69RZmxfGfuZyLq%252bxISP8w%253d%253d&nt7=0

    Emerald Med Farms, Inc. will be dual registered within the state of California as a Foreign Corporation of which its registration number is expected to be received any day.

    QEDN has recently reduced its Authorized Shares down to 600 Million from 1 Billion while also amending their Articles of Incorporation to where their Series A preferred shares will no longer have conversion rights to common shares therefore eliminating a potential 2.9 Billion shares worth of dilution:

    http://www.otcmarkets.com/stock/QEDN/profile

    Another important catalyst is that QEDN has initiated the process to have the DTC Chill lifted. Usually when DTC chills are lifted it is a very big driver for the stock. The fact that its being lifted for TD Ameritrade (biggest online broker) means a whole new group of potential buys can join in. One of the things I like most about this company is that they do not just throw PR's out just because they can. Case in point was the recent A/S reduction as seen above as well as their status becoming current on the OTC and acquisition of Emerald Med Farms which started as a letter of intent. In each case they waited to release the information as they did not want to rush the process. In each case they did what they said they were going to do which is very rare these days in the OTC. I'm sure more people will begin to cover QEDN, but one last thing to note is that since April 1st while the MMJ downtrend really got underway their have only been a handful of companies that have done well. QEDN is up 196% since April 1st, the chart is below.

    http://stockcharts.com/h-sc/ui?s=QEDN

    The Point of this instablog is to point out that there is intrinsic value in company's that do what they say and say what they do, weigh variables & tie them to risk. There is value in companies that don't PR every time they make a positive move just because they can. In the end its the OTC which is highly risky & very volatile, but every so often companies emerge to surprise the public while others can't seem to pull it together. PR's need to be read thoroughly as companies are crafty with language. They say things like "we have to stop taking on new clients" which some people take as we have too much demand and not enough supply, when the reality is they don't have that many clients they can service with their dwindling supply. You get the point etc etc etc.

    For myself I am staying away from companies with too many shares and too many question marks. I am focusing on companies that will benefit from volume coming back to the OTC with catalysts like the July rollout of recreational Marijuana in Washington as well as the states now jumping on board with the future they can not stop. As always do your DD and only invest what you're not afraid to lose. The stock market is not a magic ATM use caution, limit your risk and DO NOT go ALL IN on one stock, that's the quickest way to lose your wallet/mind. All the best-

    The Wolf

    Tags: TRTC, ATTBF, FITX, QEDN, TWMJF
    Jun 23 12:40 PM | Link | 16 Comments
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