Three Companies Capitalizing on Cannabis Right Now

Posted on Oct. 12, 2013, 5:27 p.m.
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One thing 2013 has taught cannabis investors is that not all pot stocks are the same.  At 420 Investor, one of our goals is to separate the proverbial flower from the stem as we identify the companies that have potential and get prepared for new entrants that show promise while avoiding those companies that will likely never succeed.  As we enter the final few months of the year and begin to think about 2014, there are two big trends that I think will be important, including the rollout of legalization in CO and WA as well as the rapidly growing awareness of the potential of cannabidiol (CBD).  As I look at the current universe that I am tracking, three names jump out as being the most leveraged to these trends.

First up is mCig (MCIG), which is about to launch its $10 vape-pen.  I think that the CEO has a great plan to build a brand, and I like his ethical approach.  Some of our subscribers expressed some reservations in our "Toking Tuesday" chat last week, but I think it's important to consider that the product will likely appeal to many first-time users or those who haven't smoked pot in decades but are returning now that it's legal.  Also, keep in mind that this is just a first-generation product, and MCIG is already working on a next-generation pen.  While there is always a risk that the product doesn't succeed, I think the timing of the launch is perfect, just as recreational cannabis becomes legal in two states.  I see MCIG as very likely to appeal to current smokers but especially to baby-boomers. To learn more about MCIG, I suggest that you review the interview I conducted with CEO Rosenberg earlier this month.

Next up is Medical Marijuana, Inc. (MJNA), which is the only company able to ship CBD to anyone in the U.S.  While I continue to harbor some concerns about the company and its affiliate, CannaVest (CANV), things are lining up for MJNA following Gupta's reversal in August.  For those not following closely, the company has corrected a big problem and is now forging ahead rapidly.  Previously, it was relying on its Red Dice Holdings joint venture with Dixie Elixirs, but it has created new products through CannaVest and its own marketing team (HempMedsPX).  The company is getting the word out and making sales (even to me!).  They just hired Cheryl Shuman as a spokesperson too.  While I don't expect Q3 results in November to be particularly strong, I am expecting real traction in Q4.  MJNA doesn't have a permanent advantage, in my view, but it has a huge head start over any potential competition, and I think that it will be capitalizing on this head-start in the coming months.  

Finally, GrowLife (PHOT), which just posted an updated investor presentation this week, should see a surge in business in 2014 and beyond.  I think that this is a "picks and shovels" play and that investors fail to appreciate that the company, through its online and bricks-and-mortar stores, sells a lot more than equipment.  The best way to think about PHOT in my view is that they benefit from the trends in both recreational and medical marijuana.  In case you missed our webinar with marijuana policy expert John Davis, who is on the Board of NCIA and CEO of the Northwest Patient Resource Center in Washington (which will be acquired by Diego Pellicer), 'The Imminent Collapse of Cannabis Prohibition', it's pretty clear that the marijuana industry will be highly fragmented for years to come.  This means lots of growers, which should be good for PHOT, which will benefit as production shifts from Canada, Mexico and Northern California. If Growlife is able to be dominant in the regions that are producing legal medicinal or recreational cannabis, then it likely stands to do very well. 

So, these are the companies which seem most leveraged right now to benefit from the trends I think are important and to capture investor interest.  I am not necessarily saying that one should blindly invest in these companies, as the entire sector is somewhat expensive and ahead of fundamentals due to such high demand for the stocks.  For my current view on these stocks from a near-term trading perspective, please refer to the video I emailed earlier today where I discuss these three stocks as well as GWPH and TRTC.

  • Pot$tocker — 5 Fresh New Tickers. Ever heard of NKTR $9.76, CIIX $.33, NRBT $.09, VAPR $.03, OF INAR $.0001? Posted 6 months ago
  • Pot$tocker — further review looks like $CIIX, $VAPR, and $OME are MJ or MMJ. Posted 6 months ago
  • AlanBrochsteinCFA — How so? Posted 6 months ago
  • Pot$tocker — CIIX is Denver Medicinal, VAPR are vaporizers ie MCIG, and OME is all the medicinal weed in the Netherlands if the websites are correct. Posted 6 months ago
  • Pot$tocker — NKTR is oral delivery inhaler Posted 6 months ago
  • Pot$tocker — no clue on NRBT or INAR Posted 6 months ago
  • Pot$tocker — Medicine Man of Denver, Inc., a Colorado Corporation (private), has engaged ChineseInvestors.COM for assistance in developing a licensing program for deployment of their highly innovative process technology related to cannabis (marijuana) production facilities and related management systems. With the recent constitutional amendment(s) in both Colorado and Washington, as well as the fact that 19 other states currently have cannabis (marijuana) laws (medical as well as decriminalization) on their books (Hawaii, Oregon, California, Nevada, Arizona, New Mexico, Nebraska, Montana, Minnesota, Mississippi, North Carolina, Ohio, Pennsylvania, New Jersey, Delaware, New Hampshire, Rhode Island, Connecticut, and Maine), we expect to become a key player from an integration perspective to related emerging businesses throughout the US. Medicine Man also hopes that the emerging legislation for Colorado will include an exemption for non-Colorado residents wishing to hold stock in a public company doing business in this channel. Its president and primary licensee, Mr. Andy Williams believes that his experience in the development of a superior process and technology will equate to substantial ancillary income opportunities over the next several years. For more information about this very interesting company please visit their website at www.medicinemandenver.com. Posted 6 months ago
  • Pot$tocker — VAPR serves as a marketing and business development partner for manufacturers of electronic cigarettes, electronic cigars and related accessories. Electronic cigarettes and electronic cigars, (also known as “Personal Electronic Vaporizing Units” (PEVUs) are electronic apparatuses that can be used to allow adult consumers to simulate the physical act of smoking traditional tobacco products. However, unlike cigarettes and cigars, PEVUs do not burn tobacco or have any form of combustion. PEVUs use heating elements or alternatively, ultrasonic frequencies to vaporize propylene glycol or glycerin-based liquid solutions into an aerosol mist. PEVUs give adult consumers the ability to experience similar physical sensations, appearances, flavors and delivery of nicotine to that which is enjoyed by users of traditional, combustible tobacco products. However, because PEVUs do not burn tobacco and because there is no combustion, PEVU users (commonly known throughout the world as “Vapers”) enjoy this alternative consumer experience without suffering the imposition of offensive odors, tar and ash which traditional smokers and those around them, find so undesirable. VAPR focuses on creating opportunities for culturally relevant brands seeking to acquire significant market share in the rapidly growing “Vaping” sector of the global marketplace. VAPR is uniquely positioned through its relationships with technology partners in the PEVU space, such as Safecig, an American owned industry leader, to bring the most advanced technological developments to those seeking to create their own product lines of superior electronic cigarettes and other PEVU’s. There are many brands of PEVUs currently in the marketplace mostly sold by small companies that have limited manufacturing and distribution capacities. The quality of these products varies considerably. Led by technologist John Cameron, as well as Seamus Blackley, who played an integral role in developing the X-box game system, VAPR’s partner Safecig has the reputation, technological expertise and industry experience to best enable new brands which VAPR wishes to bring to market to succeed. Our relationship with Safecig best positions VAPR's clients to achieve commercial success by providing them with state of the art technology and innovative products which are distinct from competitors in the electronic cigarette/personal electronic vaporizer sector of the marketplace. Posted 6 months ago
  • Pot$tocker — Omega Pharmaceuitcals (OME *) http://www.omega-pharma.be Exclusively distributor of Medicinal Cannabis in all pharmacies in the Netherlands as from September 1, 2003 onwards. Posted 6 months ago
  • AlanBrochsteinCFA — CIIX - way too small. Let me know if it gets above $1 Posted 6 months ago
  • AlanBrochsteinCFA — VAPR is way too small. Let me know if it gets above a dime Posted 6 months ago
  • AlanBrochsteinCFA — OMGYY is a foreign company and I don't really have much access to info on it. Posted 6 months ago
  • Pot$tocker — OME is on the NYSE. Never heard of OMGYY. Posted 6 months ago
  • AlanBrochsteinCFA — OME is Omega Protein - they harvest fish Posted 6 months ago
  • Philip J. — MWIP the leader in compassionate care solutions should bounce this week Posted 6 months ago
  • super-solar — Hello PJ. why do u xpect MWIP to jump up this week ? Posted 6 months ago
  • orvaschrock1 — keep digging, potstocker, viable new candidates are bound to appear... Posted 6 months ago
  • AlanBrochsteinCFA — I found two more - CBDS and MLCG Posted 6 months ago
  • AlanBrochsteinCFA — The Board of Directors of ML Capital Group, Inc. (the “Company”) announced today that it has signed a Letter of Intent to acquire 51 percent ownership of Zenetek, LLC., a mobile apps development firm based in Southern California with development facilities in Saigon, Vietnam. The purpose of this acquisition is to develop social media and mobile apps for the medical marijuana industry. These new specialized apps will enable prescribed patients much needed information to make a better decision on whether or not cannabis is an appropriate treatment option and provide patients with better access to local resources. Together, both companies have set up a new offshore software development facility in Saigon, providing hardware and software leasing arrangements and deploying company executives and project managers to oversee projects from start to finish. Concurrently, ML Capital will provide marketing, finance, accounting and administrative support to Zentek. Posted 6 months ago
  • AlanBrochsteinCFA — I can almost guarantee that CBDS is a scam. The guy running it is from HEMP - Tobias. The company is changing its name to Cannabis Sativa Posted 6 months ago
  • super-solar — Contenders or pretenders? not easily determined. Posted 6 months ago
  • super-solar — There are already MANY apps out there performing a myriad of MMJ functions. IDK the criteria by which they are vetted. Posted 6 months ago
  • super-solar — AB. SYK. : mCig hitme back with an ordering code VERY quickly/efficiently. Posted 6 months ago
  • Jo B — morning all. AB, help me understand.. if companies are suspected of being scams, why are they still allowed to "run", and why doesn't anyone get arrested until years later?/ Posted 6 months ago
  • AlanBrochsteinCFA — P.T. Barnum, JB, P.T. Barnum: There is a sucker born every minute. There is nothing illegal about what HEMP does. Posted 6 months ago
  • Jo B — that's what I thought. ty Posted 6 months ago
  • Rainman — Just commenting to get notified of new comments. Posted 6 months ago
  • Pot$tocker — $ADS (payment processing), $CRLRF (hemp clothing), and SAVW (led lighting) were also listed. Their relationship with MJ or MMJ is debatable. Posted 6 months ago
  • Pot$tocker — How about $SNRY? Posted 6 months ago

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Alan Brochstein

I have worked in the investment industry since 1986 and earned the CFA charter in 1997. I worked for Kidder, Peabody in bonds from 1986-1992 and then First Boston's investment management subsidiary from 1992-1994, both in NYC. I then joined Criterion Investment Management (later acquired by Nicholas Applegate and then West LB) as a portfolio manager helping to manage $10 billion in fixed-income investments. In 2000, I made the move to stocks, joining a small firm in Houston as an analyst and portfolio manager. I left in 2006 and formed my own business, AB Analytical Services.

From 2007 until March, 2014, when I made the decision to devote my time exclusively to the cannabis sector, I worked as a research consultant to several investment advisors. Additionally, I offered a model portfolio service to individual investors from 2008 (www.InvestByModel.com), adding a private blog in 2011. In 2009, I began working with an independent research firm that focuses on evaluating the management teams of publicly-traded companies. In 2013, I came to the Marketfy platform and launched The Analytical Trader, with the goal of providing swing-trading ideas that would offer 4:1 reward-to-risk over a two-week time-frame. Later in the year, sensing an unmet need in the market for objective information on cannabis-related stocks, I launched 420 Investor as the go-to place to help investors capitalize on the "Green Rush". Finally, I have been one of the most successful bloggers at Seeking Alpha since early 2007. You can access my 600+ articles at http://seekingalpha.com/author/alan-brochstein/articles

I am very dedicated to the idea that people can manage their own money and get market-beating performance at a reasonable all-in cost, avoiding costly middlemen who tend to deliver mediocre performance, at best. My goal is to help you by providing ideas that are based on sound processes and decades of experience, letting you make the ultimate judgment regarding the commitment of capital. I enjoy interacting with subscribers and look forward to working with you.

You can find me on LinkedIn: http://www.linkedin.com/pub/alan-brochstein/1/182/165