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Capitalize On Cannabis Report - 01/07/17

|Includes: American Cannabis Company, Inc. (AMMJ), CGC, GBLX, GRWG, INQD, MSRT, XXII

Cannabis stocks began the year with good volume, ending the week about unchanged after a rally on Tuesday. The industry news flow was light to start the year.

Here are some of this week's highlights for Focus List names:

  • AMMJ promoted its COO to CEO, with the former CEO migrating to a client servicing position. The company also accessed an additional $1mm through the sale of equity.
  • GBLX received the registration certificate for its Nevada cultivation facility and can now grow
  • GRWG added an experienced Inventory Controller
  • INQD announced a potentially transformational deal, signing a letter of intent with Alamo CBD, which, in turn, has an an agreement to create a JV with Vyripharm to conduct pharmaceutical cannabinoids research
  • MSRT issued a shareholder letter suggesting positive cash flow in "early 2017"
  • TWMJF addressed the Mettrum pesticide-related recall
  • XXII will be delaying its filings with the FDA to split its combined Modified Risk Tobacco Product Applications (MRTPAs) and Premarket Tobacco Product Applications (PMTAs) for 22nd Century's "BRAND A" Very Low Nicotine tobacco cigarettes

The 420 Investor Cannabis Stock Index fell 0.1% this week to 74.05 and was up 18.8% in December and up 88.8% for 2016. The index, which currently includes 44 stocks, ended 2016 at 74.10.

420 Opportunity ended the week valued at $44,725, down 0.4%. In 2016, the model portfolio increased 293.4% compared to the 88.8% increase in the index.

Valuations have increased and remain cautionary, and fundamentals are questionable for most of the >400 companies in the sector. The market rallied on the cannabis legalization efforts as well as the legalization path in Canada. It would be the wrong conclusion, in my view, to believe that the rally in the vast majority of OTC cannabis stocks is sustainable, so we could be in for a period of consolidation. The retention of the Republican Senate majority was a negative for the cannabis industry.

The big themes ahead are likely to be insight into the new President's plans regarding the federal view on state-legal cannabis (especially in light of his nomination of Senator Jeff Sessions as Attorney General), better clarity from the federal government for banks and cannabis research (both part of the proposed CARERS Act and other proposed legislation), DEA pushback towards the CBD from industrial hemp industry, the inclusion of a broader range of extracts in Health Canada's ACMPR program and its continued growth in patient enrollment, potential legalization in Canada (Spring 2017 introduction of legislation at Parliament), the introduction early next year in Germany of MMJ legislation as well as continued advances in South America, progress with respect to the new legal cannabis implementations in CA, MA, ME, and NV and the new MMJ implementations in Arkansas, Florida, Hawaii, Illinois, Maryland, Minnesota, Montana, Nevada, North Dakota, Ohio, New York, Nevada, Massachusetts, Pennsylvania and Texas, and the implementation of the new medical program in California.

The slide, which began in March of 2014, reversed out the entire gains from early 2014, with the market currently near the summer 2013 lows after the rally since mid-February. Most valuations remain high. Positively, we are seeing some new entrants into the publicly-traded sector of higher quality, and hopefully we see more in 2017, especially with the number of legal states doubling. Please remember that it remains the case that most of the penny stocks will not succeed. I expect that there will be just a few winners among the 400+ companies that are currently on our Broad List.

Here are some of the most interesting stories we published on New Cannabis Ventures this week:

6 Multi-State Medical Cannabis Companies to Watch in 2017

BDS Analytics Replaces New Frontier as Arcview Data Partner

Cannabis Companies Need to Stop Stealing Intellectual Property​

Cannabis Science Misrepresents in Press Releases

Canopy Growth Addresses Mettrum Recall Issue

Emblem to Raise $10mm

GrowGeneration Hires Way To Grow Inventory Manager Joseph Prinzivalli

Leading Cannabis Companies to Present to NYC Institutional Investors


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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: At New Cannabis Ventures, we work with several publicly-traded companies, including Aurora Cannabis, Canopy Growth, Emblem, GrowGeneration, and OrganiGram, providing each of them with Investor Dashboards. For more information: