By Lynn Thomasson
April 28 (Bloomberg) -- A debit-card company that changed its name to Medical Marijuana Inc. more than doubled on its first day of trading on the over-the-counter stock market.
The former Club Vivanet Inc. said it plans to use prepaid cards to manage tax collection and payment processes for marijuana dispensaries in states that allow the drug to be used for medicinal purposes, according to a release sent by Market Wire. The company, trading under the ticker MJNA, will also split its shares 10-for-1, the statement said.
States including Oregon and California allow residents to use marijuana for diseases ranging from cancer to epilepsy and glaucoma. More than 20,000 Oregon residents are registered to use the drug, based on statistics from the state’s Web site.
“This is a sizzle product,” Bruce Perlowin, Medical Marijuana’s chief executive officer, said in a telephone interview from El Paso, Texas. “We eventually want to be the McDonald’s of marijuana.”
The last quarterly report from Club Vivanet, spun off by Medical Marijuana this month, showed revenue of $250,262 for the quarter ended Sept. 30, according to filings posted on the Web site for Pink Sheets OTC Market Inc. The report listed its accountant as At Ease Accounting & Tax Services in Cape Coral, Florida.
The Dec. 31 filing said Club Vivanet had 12.5 million shares outstanding, with 5.6 million owned by its chief executive officer, Donald Steinberg, and vice president, Roberta Steinberg. A Boulder, Colorado, company called New Compendium Corp. owned 3.4 million shares.
Perlowin, 57, said he spent nine years in prison for smuggling marijuana, which has been outlawed by the U.S. government since 1937.
Shares of Marina Del Rey, California-based Medical Marijuana quadrupled since March 31, when it first announced the name change. The stock didn’t trade for most of February. Almost 500,000 shares changed hands yesterday, about eight times last week’s average, according to data compiled by Bloomberg.
Medical Marijuana surged 123 percent, the most in a month, to 50 cents today. Volume was approximately 1.2 million, the highest since at least 2003, according to Bloomberg data.
The Pink Sheets OTC Market, located in New York, trades stocks that aren’t registered with the Securities and Exchange Commission and don’t comply with many of the financial disclosure rules required by the Nasdaq Stock Market or the New York Stock Exchange.
Pink Sheets warns investors on its Web site that Club Vivanet provides limited financial information and that no brokerage currently makes a market in its stock, which may result in wider swings in prices.
“These are highly speculative investments,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.5 billion in Elmira, New York. “A Pink Sheet listing is something we would never look at.”
Last Updated: April 28, 2009 18:16 EDT