Editor’s note: This article was first published in November 2012; the share prices of Cannabis Science and GreenGro and the state of US marijuana laws, including the Colorado, Washington and Massachusetts votes and the federal ban, are as of 13 November 2012. The share purchase described at the end of this article was the author’s own speculative decision in November 2012. It is not investment advice, and penny stocks are highly risky.
It is not that marijuana has become part of the commodities market, although we can say that the plant has become the main raw material of two small-cap listed companies that have been trading on the US market for just a few months. It’s a shame we weren’t watching these companies, or the vote in the United States on the use of marijuana for medical purposes. The vote, by the way, was in favour, and the share prices of these companies shot up by more than 100% in under seven days.
The big winner has been Cannabis Science, a development-stage company whose business is creating cannabis-based medicines to treat diseases and for health care in general. Seven days ago the company’s shares were trading at $0.049. After several rises, they reached $0.099 (a 100% return), although the stock has now entered a correction and closed today at $0.0706.
The second big winner is GreenGro, a company that offers vertical systems for growing marijuana for therapeutic and medical purposes, as well as management and advice for clients setting up growing facilities. The company was trading at $0.021 and went on to gain more than 400% ($0.107), closing today at $0.05.
Our investment advice
Clearly, both Cannabis Science and GreenGro are risky investments. Although both share the same idea, their business models are very different, but both will depend in the future on how the sector is regulated.
Tech company GreenGro benefits from the fact that marijuana has been legalised (with restrictions) for medical and recreational use in Colorado and Washington, and for medical use in Massachusetts, although federal law still says marijuana is illegal in all its forms. Cannabis Science, on the other hand, benefits from being practically a pharmaceutical company whose aim is to bring these medicines to the whole world.
My advice would be to buy about 3,000 shares of Cannabis Science as soon as it finishes correcting. That will cost you less than €200, which, in principle, you should consider lost, and forget about this investment for two to five years. Who knows? We might get a surprise and the investment turns out to be very profitable, or… we might find the company has closed down.
Featured image: Daniel Oberhaus, CC BY-SA 4.0, via Wikimedia Commons.
