Penny Stocks Did This To Marijuana Stocks

Unlike GW Pharma or Insys, which are both legitimate companies trading on the NASDAQ with market caps above $1 billion, most companies selling marijuana (as opposed to marijuana-derived drugs like GW Pharma and Insys) trade over the counter. Not trading on one of the major exchanges introduces all kinds of problems for investors — like low volumes that make it hard to get a good price to buy and sell — but from a “potential to go up in smoke” perspective, the lack of required disclosures for companies trading over the counter makes it really hard for investors to know how stable the company is.

Trading in one company, which I won’t even mention by name since it trades for less than a nickel per share, was suspended last year by the SEC because the agency was worried about “accuracy and adequacy of information in the marketplace” and “potentially manipulative transactions” in the company’s stock.

Even if you can find a marijuana-selling company of legitimate size with disclosures you feel comfortable with, the company is still tied to the political winds. The current federal government has decided that it isn’t worth prosecuting people and companies following state laws even if it’s still a federal crime, but that doesn’t mean that things won’t change in the future.

This coming blockbuster will make every biotech jealous. The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase.

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