12 Marijuana Stocks For Your Do Not 'Buy And Hold' List - Part I

by: Anthony Cataldo


I have selected 12 marijuana stocks to research, where 8 (~67%) of these 12 stocks are incorporated in the state of Nevada.

Nevada has only 8% of the market in “the market for corporate law,” but provides a “safe haven” for fraudsters.

These stocks might be good for a “day-trade,” but unless something very significant changes, they are not good for a long-term “buy and hold.”.

Look at the event dates, how and why most of the 52-week highs were achieved.

You can still make money trading these stocks, but, most likely, only if you are able to anticipate and “go along for the ride” on the next “pump and dump.".

My first marijuana stock article on Seeking Alpha drew a bit of fire, but mostly from those associated with Nevada Corporations. This is the first of a series that I will putter with, over the next few months. There are just too many of these "wanna be" marijuana stocks to examine and review in a single SA article. It seems, really, that they are just falling out of the sky. I hope you find this first installment helpful. I am guessing that 4 more, in groups of 12, may be necessary in the months that follow. I will be looking at fundamentals, but also "the company they keep."

Marijuana is the New "Next Big Thing"

Marijuana is the new "next big thing," so expect some firms to go from, say, energy exploration or gold mining (two of the last "next big things") into marijuana (e.g., Bayport International Holdings, Inc. (OTCPK:BAYP), a Nevada corporation). Bayport is not included in the 12 stock examined, but is a Nevada Corporation and "the poster child" for the "next big thing" pump and dump, followed by a reverse-split.

Investigating "Next Big Thing" Marijuana Stocks

Generally recommendations before buying any marijuana stocks follow:

First, check the state of incorporation. If incorporated in the state of Nevada, proceed cautiously. Note that the state of Nevada has a differentiated product, minimizing disclosure. Minimal disclosure is good for executives and officers, but bad for shareholders. It is the opposite of transparency. Nevada uses their differentiated corporate law to attract those interested in this feature of their corporate law and to generate premium tax revenues from corporate filing fees.

Delaware is the leader in "the market for corporate law," at about 54% market share, and the tax revenues are so high that they do not need a sales tax and their property taxes are relatively low. Because I live in Southeastern Pennsylvania, I know about the 0% sales tax rate in Delaware and their enjoyment of the lower property taxes made possible by their leadership position in the area of corporate law and their collections of corporate filing fees.

Second, check the firm's auditor, accountant and legal counsel and their other publicly-traded clients. We are known by the company we keep. This website works well for this research. Merely enter the ticker symbol and examine the "company profile" tab on the left. Click the link for the accountant/auditor and counsel. Look for stop signs, skull and cross bones insignia, and yield signs associated with their client lists. The more warning signs, the more likely that your target stock is engaging accountants and attorneys likely "making a market" in representing scoundrels. Some examples follow:

Finally, look at a variety of fundamental measures: (1) Look at the working capital position. If negative, why buy the stock? This represents a failure to maintain a "going concern" assumption. U.S. GAAP requires that these firms restate assets at net realizable value (a conservative approach). (2) Where are cash flows coming from? If negative cash flows from operations are being funded by positive cash flows through stock and debt sales, why are you buying stock in a firm diluting your ownership interest? (3) Look at the number of "paid for" press releases. If they are constantly paying for news releases that appear to be favorable, yet the stock price per share is not rising, consider the possibility that they are selling stock into insider-controlled, news-based rallies, and you, as a shareholder, will never benefit from stock price per share appreciation (i.e., suboptimal trading). (4) A history of reverse splits is, of course, "the kiss of death." Don't buy stock in these firms. They pump, dump, reverse split, and repeat the process. They only sell "pipe dreams" and stock.

Marijuana Stock 52-Week High Event Dates

Let's look at the 52-week high event dates for the 12 marijuana stocks I have selected. They are listed below, in ticker symbol alphabetical order, as follows:

State of

MJ from





































































* Not trading in March, so excluded from graphic.

Note that 4 of the 12 or about ~33% of these firms were in some form of mining or energy industry. Also, note that the vast majority of the 52-week highs (6 of 12 or 50%) for these 12 stocks occurred in March 2014. This is the event date/period for the Canadian MMPR (Marihuana for Medical Purposes Regulations). That was the event date that drove these 52-week highs. Unless a similar event is scheduled in the near term, there is no compelling reason to purchase any of these marijuana stocks in the near term. A graphic is provided below:

Some Thoughts on the First 12 Marijuana Stocks Follows

1.BreedIT Corp. - You Say Tomato, I Say Why Not Potato?

BreedIT Corp. is a Delaware Corporation with a very significant and positive working capital position. Cash flows are being generated from stock sales and warrant purchases. There are numerous dilutive sales of stock, warrants, restricted warrants, and options at significant discounts. Operating cash flows are negative. Their accounting firm has an extensive list of publicly-traded clients (100+), though quite a few have warning signs on the PinkSheets website. Their business description follows:

The company acquired an exclusive worldwide license for a unique and highly sophisticated decision-making software used for the purpose of advanced agriculture breeding (the "IDSS Software"). The company's plan is commercially exploit (sic) the IDSS Software and anticipates that it will be fully ready for worldwide marketing in 2014.

Prior Seeking Alpha Article Recommendations and Performance

  1. Mar. 23, 2014 12:29 PM ET SA article - sell or do not buy, yet, at $0.72 per share.
  2. Apr. 21, 2014 11:25 AM ET SA article - sell or do not buy, yet, at $0.44 per share.
  3. Jun. 3, 2014 10:37 AM ET SA article - buy and hold at $0.42 per share.
  4. Dec. 12, 2014 close at $0.09 per share.

The 1-year chart follows:

I cannot quite understand why a "unique and highly sophisticated decision-making software used for the purpose of advanced agriculture breeding (the "IDSS Software")" would be useful for marijuana and no other, perhaps higher priority, agricultural products. After all, increased marijuana production might lead to "the munchies" and greater demand for food. For this reason, a "wait and see" approach seems prudent.

2. Cannabis Group, Inc. - Gambling Without Information

Cannabis Group, Inc. is a Nevada Corporation that has been identified as a troubled firm. As of July 14, 2014, approximately 2 months after the SEC trading halt, the CEO/Chairman Mr. Cummings resigned.

With a 52-week high of $0.48 and a December 12, 2014 closing price of $0.002, Cannabis Group is "on sale." However, purchasing perishables after their expiration date is always risky. The firm's negative working capital position and some very crude or unprofessionally prepared financial statements without any footnotes, lead one to conclude that the warnings on the PinkSheets website are understandable and warranted. Sentiment on the IHUB stock chat message board is negative, and, while it is possible for a recovery, perhaps under new leadership, this one is a lottery ticket (i.e., gambling without information). The 1-year chart follows:

3. American Green, Inc. - Where are the Financials?

(Thanks to Alan Brochstein, CFA for catching my oversight/error)

The Company was incorporated on November 12, 1998 in Nevada as Ti-Mail Inc. During the year 2000, it changed its name to Desert Winds Entertainment, Inc., and then during 2000 to SunnComm, Inc., during 2002 to SunnComm Technologies, Inc., and during 2004 to SunnComm International Inc. On June 14, 2007, the Company changed its name from SunnComm Technologies Inc. to The Amergence Group, Inc. On March 8, 2011, it changed its name to Altitude Organic Corporation. On January 6, 2012, the Company changed its name to Tranzbyte Corporation, and then on May 9, 2014, to American Green Inc.

The firm has a negative working capital position, but has revenues with a favorable gross profit percentage, though positive cash flows are being generated, only, from financing activities.

The 1-year chart follows:

With a market capitalization of nearly $50 million, the annual information and disclosure statement is provided, but there are no financial statements. The capital structure appears to be overly complex, with common and 2 classes of preferred stock. It is odd that the firm cannot provide financial statements, even a set of financials in poor form might be better than nothing.

Their accounting firm has only American Green as a publicly-traded client. Yahoo Finance has some financial information, but a negative working capital position is not favorable.

Their legal counsel has quite a few publicly-traded clients, but appears to have made a market with troubled firms. The firm has a nice website, and I hope they do well, but would not buy their stock.

4. Green Cures & Botanical Distribution, Inc. Has Little To Distribute Among Many

Green Cures & Botanical Distribution, Inc. is a Colorado Corporation with a negative working capital position and a complex capital structure:

At September 30, 2014, the company issued a Convertible Note payable to Green Cures, Inc. for $82,499 plus interest at 5% per annum, accrued monthly, due on or before February 1, 2015. The amount of the note reflects advances from Green Cures, Inc., to the company from July to September 2014.

Green Cures, Inc. is a California Corporation and holds the controlling interest in GRCU through voting Series A preferred shares. There is no compelling reason to buy and hold GRCU. The 1-year chart follows:

5. IMD Companies, Inc. - Cost Of Sales Rising

IMD Companies, Inc. is a Florida Corporation with a negative working capital position. Cost of sales, as a percentage of revenues, have risen, dramatically. Shares of stock have been issued for acquisitions and to pay expenses. The convertible notes sections of the financials should be examined, carefully, before purchasing this stock. Their accounting firm has quite a few clients with cautionary notes on the PinkSheets website. This stock is not likely to represent a favorable candidate for a buy and long-term hold. The 1-year chart follows:

6. Cannabiz Mobile, Inc. - No Favorable Buzz For This Biz

With a 52-week high of $3.75 per share, you really have to wonder how we reach a 52-week low price per share of $0.004. I guess this is why some short penny stocks.

Formerly, Lion Gold Brazil, Inc. (until 6-2014), the corporate name change was not accompanied by a ticker symbol change, and the 8:1 ex-date reverse split (on June 24, 2014) was probably not to be viewed as favorable by shareholders, as the below chart suggests. This is just another Nevada corporation in the mining business, converted to "the next big thing" - marijuana, as gold prices decline and the trend toward legal marijuana use for both medical and recreational purposes provides greater promise for those "selling stock."

Cannabiz Mobile, Inc. is a Nevada Corporation with no revenue and not to be troubled to take the time to develop a classified balance sheet or notes to their financial statements. No matter. The financials provide no evidence to compel anyone to buy this firm's stock. With no accounting firm and a legal counsel with 5 of 6 publicly-traded firms with negative indicators on the PinkSheets website, you would really have to get a buzz to get into this biz. The 1-year chart follows:

7. Lexaria Corp. Moves From Oil And Gas Exploration To Marijuana

Lexaria Corp. is a Nevada Corporation with a positive working capital position. Revenues, through June 2014, have been generated from oil and natural gas. Positive cash flows have been generated from financing activities.

From the notes to the financials:

The company was formed on December 9, 2004 under the laws of the State of Nevada and commenced operations on December 9, 2004. The company is an independent natural gas and oil company engaged in the exploration, development and acquisition of oil and gas properties in the United States and Canada. The company's entry into the oil and gas business began on February 3, 2005. In spring of 2014, the company added another business sector in its entrance to medical marijuana.

The 1-year stock price chart follows:

It always concerns me when a firm moves from "the last big thing" to "the next big thing," and Lexaria reminds me, a bit, of Bayport, also a Nevada Corporation. I will try to keep an open mind on this one, but I see no compelling reason to buy at this time.

8. Novus Acquisition Development Corp. - Perhaps A Trade, But Not A Buy And Hold

Novus Acquisition Development Corp. is a Nevada Corporation. The financial statements were prepared by someone lacking basic typing or formatting skills (see below). Three different formats are used for the dates/headings. Commas are sometimes used and sometimes not used for thousands. Perhaps these financials were produced during periods and by those involved in product testing.

Working capital is positive and the firm was profitable during its last quarter (September 2014). However, how a firm with assets of $34,000 and most recent quarterly revenues of $40,000 achieves a market capitalization of $58MM is not easily understood. Perhaps the following Forbes contributor article, naming Novus as the #1 marijuana stock pick, explains the valuation:

This red-hot, Miami-based consulting company provides a medical cost-savings plan for people who'd like to receive alternative medical treatment - namely, cannabis. For less than $20 a month, subscribers receive steep discounts on the cost of their prescribed weed. Last month, Novus rolled out its Medplan benefits network to states where medical pot is legal, and hired another sector startup, organic grower TKO Organics, to grow and dispense its patients' ganja in seven states.

I suppose this business model makes sense to many.

The 1-year chart follows:

The 1-month price per share chart and associated table identifies a sharp decline in the price per share, associated with high volume, on December 10, 2014. Possible explanations for this trading activity were a topic of debate on the IHUB stock chat message board. Some noted that 93% of the stock is controlled by executives.







Dec 12, 2014






Dec 11, 2014






Dec 10, 2014






Dec 9, 2014






Source: Yahoo Finance

A valuation that does not make sense to me, a business model that does not make sense to me, and some recent, odd trading behavior that does not make sense to me all contribute to my existing concerns over basic typing skills and the fact that this firm is incorporated in the state of Nevada. If subscriptions revenues start to roll in, I will have to take another look at this one. One stockholder was very upset and took exception to the above when posted on the SA Instablog, assuring me that this firm was "for real."

9. Medical Cannabis Payment Solutions - There's No Business Like No Business

Medical Cannabis Payment Solutions is a Nevada Corporation, based in Las Vegas. The firm has a very favorable working capital position from debt and equity issues, and management and those associated with the firm have some impressive credentials, but there are no significant revenues. IHUB sentiment is thin, but positive, primarily based on some penny stock promotional campaigns (September 23, 2014) and the anticipation of more in the future. The 1-year chart follows:

I would put this one on your radar screen, wait for the next "pump," consider "trading," but don't stay in for past the "dump." I like the pedigrees for those involved, but would like to see some evidence of execution and prospects for significant, incoming revenues.

10. Singlepoint, Inc. - Sorry For Your Loss

Singlepoint, Inc. is a Nevada Corporation with a negative working capital position. Promotional materials provide some information on the firm. The firm's capital structure is a bit of a "red flag:"

Each share of Series A Preferred Stock votes with the shares of Common Stock and is entitled to 15 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.

With a 52-week high of $0.31 and a December 12, 2014 close at $0.006 per share, long-term SING shareholders are singing the blues. This one might best be avoided as a long-term hold. The 1-year chart follows:

11. Supreme Pharmaceuticals, Inc. - There's Gold In Them Thar Bongs

Supreme Pharmaceuticals, Inc. is another firm getting out of mining and getting into marijuana. This is just another firm going from "the last big thing," which was gold, to "the next big thing," which is marijuana. When you fail in one industry, why not try your hand at another, completely unrelated industry? The common theme that is likely is failure. The 5:1 reverse split has been executed (July 29, 2014), so it is time, again, to sell some stock. The 1-year chart follows:

On the other hand, this video was impressive. Still, I might sit on the sidelines for a little bit.

12. Totally Hemp Crazy - Totally Crazy To Invest In This One

Totally Hemp Crazy, Inc. is a Nevada Corporation with a negative working capital position and quarterly sales approaching $1,000, and, they managed to generate a profit during this quarter, despite deferred consulting fees approaching $300,000. It has been a long time since I have seen a publicly-traded firm disclosing pennies in their financial statements. And why are all the pages slanted? The 1-year chart follows:

Do I think you should buy stock in this firm? I think you would have to be crazy…totally.

Remember, What Happens in Vegas Stays in Vegas - This Might Include Your Money!

Nevada is known for legalized gambling, legalized prostitution, and a safe haven for fraudsters looking for a corporate law that facilitates non-disclosure and non-transparency. This does, not, of course, mean that all Nevada corporations are evil. Similarly, all Nevada prostitutes will not give you a STD and you might put a quarter in a Nevada slot machine and hit the jackpot. And all formerly mining stocks are, also, not evil, but take a few minutes and glance at BAYP. Be particularly cautious when buying Nevada corporation stocks, or any, touting the "next big thing," and do a bit of due diligence before "pulling the trigger" on these and other marijuana stocks.

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

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.