This blog post was written by Alan Brochstein and the original post can be seen here.
In typical fashion for the company, Medical Marijuana, Inc. (MJNA) dropped an aggressive press release lacking substance in what appears to be a last-ditch effort to interest investors in its comatose stock. Before the market opened on 1/22/15, the company announced that it had signed a "Definitive Agreement to Acquire Kannaway, LLC", a newly formed multilevel marketing organization (MLM) that is owned by General Hemp, LLC. General Hemp is controlled by Stuart Titus, who has long ties to MJNA and was able to pull out $7mm from CannaVest (CANV) as he sold into the speculative peak last year as described by Forbes Magazine and detailed in SEC filings.
The press release described the products, shared some information about the company's success, and trumpeted a valuation by Houlihan Capital of "$119.6-242.7 million". That sounds huge considering MJNA itself is valued by the market at roughly $120mm based upon about 1 billion shares and a recent close near $0.12. In my view, it's what MJNA didn't say that should leave investors concerned:
What are the terms of the "definitive agreement"?
What are the financials of Kannaway?
How will the acquisition benefit MJNA shareholders?
This is an exciting time to be an accredited investor in the medical marijuana / cannabis sector, the industry has become legalized in many countries around the world and that trend is only gaining momentum. To be successful at investing, most sophisticated investors like to follow trends and get invested early while the trend is gaining momentum. Once you have maximum participation from the retail investing crowd, we can be assured the trend for that sector had pretty much peaked and will soon reverse.
While the last year has been an extreme roller coaster ride for most investors in the cannabis market, we can feel confident that this trend is still at the early stages, well established and on an upward momentum. The rise and fall in stock prices in the last year was a result of hot money coming in and out of the sector, illiquid markets and tight share structures. But what we didn't see during that time is the participation from the institutional and professional money crowd.
I recently had the privilege of attending the very first national conference of the relatively young (they were founded in 2010) National Cannabis Industry Association (NCIA). NCIA is the first national trade organization focused on the entire cannabis plant. It was also my first visit to Denver since stores opened up in January, and the feelings of freedom and anticipation for the future were palpable.
Some call the NCIA “Big Pot”. In some ways they are probably right. But the truth is, the fight for legalization still has a long way to go, and no one represents “Big Pot” yet. There were many suits and ties in attendance, and there is no doubt that a few of those same persons are going to eventually make it big in the new marijuana industry. I heard over and over, “this is the next dot-com!” So buyer beware. (Read the rest of the article)....