Marijuana Stocks Weather The Storm, Light At The End Of The Tunnel
Marijuana Stocks Mentioned: VBIO, RMHB, UBQU, AXIM, MCIG, TSE:WEED, TWMJF, CVE:OGI, OGRMF, TSXV: ACB, ACBFF, APH.V, APHQF
The marijuana industry couldn’t catch a break a few weeks back. First there were comments made by Sean Spicer and his opinion of what the administration thought about legalized marijuana, then there were Jeff Sessions’ statements on his dislike for the drug. But now that investors have seen a bit of the light, now could be the time to be paying attention to cannabis again.
If there’s one thing to investors like to looks for, it’s discounts and though psychology would suggest that when prices are high, investors wish they “could have gotten in when,” similarly, when prices are low, some think, “well I’m glad I didn’t get in when.”
With the marijuana sector in particular, not only has it been very cyclical but it has also been very much a speculation driven market. Now that things have settled a bit, I think it’s time to start looking at this market again because there could be some heavy discounts to consider, especially as more states head toward legalization.
In fact, a state that no one thought would have legalized medical marijuana, has now been discussing expanding it’s current marijuana rules to include additional diseases to treat. The New York State Health Department announced a series of changes in their medical cannabis program that is expected to increase patient access in more rural parts of the state. The state’s Health Department will add chronic pain as a qualifying condition, effective March 22nd.
So with a speculative market in place already, what are some of the marijuana stocks to be watching after the sectors recent consolidation?
As far as medical marijuana is concerned, studies have shown that many patients actually prefer it to prescription drugs. In an article from MarijuanaStocks.com the site writes that, “Research published in the International Journal of Drug Policy has discovered that people taking psychoactive medications and drugs for conditions such as chronic pain seem to prefer medical cannabis to other drugs, including sedatives, opioids, and antidepressants.”
Several cannabis stocks that deal with pain management and even pharmaceutical applications could something to pay attention to. Ubiquitech Inc. (UBQU) through its subsidiary, HempLife Today™ focuses on CBD’s. This substance has been linked to having positive effects on people with chronic pain and even neurological diseases like epilepsy. The company itself has a large product suite that includes oils, tablets, tinctures, and more. The stock, like many others in the space, pulled back from previous highs of $0.04 (levels it hadn’t seen since May of 2016). New guidance from the company shows expectations that Ubiquitech could see an increase in their revenue for the quarter, by over 50% for the period ending Feb. 28th, according to recent press. The company recently came off of a strong year with annual revenues coming in just under $3.5million and realizing an earnings increase of 840% from the previous year in 2015. Further guidance for 2017 also shows favorable growth for the company as stated in a March 23rd announcement.
Vitality Biopharma (VBIO) has pulled back from previous highs in December. Recently trading activity, however, has the stock trading in more of a sideways pattern. The company focuses on “prodrug pharmaceuticals” that utilize cannabinoids for the treatment of serious neurological and inflammatory disorders.
In December, the company announced that it had obtained DEA approval for its research and development facilities in California. As a recent follow-up, Vitality announced that it has also completed preclinical pharmacokinetics studies with its proprietary THC glycosides in order to analyze their bioavailability. “This new drug opens up novel opportunities for treatment of pain and inflammation,” said Dr. Brandon Zipp, Director of R&D at Vitality. “We can now exploit the cannabinoid receptor system without systemic THC that compromises cognitive function.” Robert Brooke, CEO of Vitality, adds that, “It is THC without the high and could be a game changer, especially for treatment of indications like Crohn’s disease and for use in children.”
Rocky Mountain High Brands (RMHB), a company focused on the beverage business, has mimicked a similar move after pulling back from highs of $0.164 in January. Products under the brand include several hemp infused drinks targeting energy drink consumers, relaxation drink consumers, and those interested in bottled water as well. Recently the company announced that it has entered into an agreement with L and H Resort Systems to acquire a former Catskill Mountain resort facility located on a natural spring.
According to the company, the plan is to repurpose the resort into a Bottling and Canning Plant for Rocky Mountain High Brands. A few weeks back, control of the company changed via a share purchase from the company’s previous controlling shareholder. Details of this can be found in an 8K filing. Though the stock has pulled back, this is seemingly par for the course of the industry. Recent trading sessions show shares of Rocky Mountain have been relatively unchanged after trading between $0.078 and $0.087.
Axim Biotech (AXIM) have steadily begun to recover after “the great marijuana stock pull-back.” At one point the stock was trading as high as $19.80 and ended up consolidating to as low as $8.01 in February. The company’s flagship products include CanChew®, which is a CBD-based chewing gum, and MedChew Rx, a combination CBD/THC gum that is undergoing clinical trials for the treatment of pain and spasticity that deal with multiple sclerosis. In recent news, Axim announced that it has retained a contract research organization, Ora®, Inc., to take care of the company’s pending product development and clinical trials for the treatment of glaucoma and dry eye. The company will be utilizing cannabinoid-based therapeutics
Since trading around $0.025 in September, mCig, Inc. (MCIG) has managed to reach highs of $0.505 within the last few months but yet again, as with many other stocks in the sector, shares have pulled back in price and recent trading has seen the trend as more sideways than anything. The stock has been upholding a channel roughly between $0.200 and $0.30 for the last few weeks. The company most recently announced that it has been selected to be the builder of choice of the first large scale indoor grow facility in Oregon for Forest Grove Cultivation. According to the company, the project will generate a minimum $1.5M in revenue for the Company, but could exceed $1.9M with add-ons.
But this trend hasn’t just impacted US-based public cannabis companies either and with that, the timing for international stocks headquartered in Canada could also be something to keep a close eye on. This is also in consideration of the country’s pending legalization. A few of these consolidating Canadian marijuana stocks include Canopy Growth Corp (TSE:WEED) (OTC:TWMJF), OrganiGram Holdings (CVE:OGI)(OTC:OGRMF), Aurora Cannabis Inc. (TSXV: ACB) (OTC: ACBFF), and Aphria, Inc. (APH.V) (OTC:APHQF).
The major takeaways for investors are to keep in mind that the market for marijuana and cannabis stocks has seen a period of consolidation, which followed previous statements made by certain officials. However, recent sentiment and statements made further by some of the same parties could support a more favorable stance on the topic. In the end, though many of these stocks saw a first quarter high, the general pullback, industry-wide, could be signaling investors to be on the lookout for the next sector catalyst to spark another bull move.