FINRA and the SEC Deflate Marijuana Stocks (For Now)

TIHS WAS WRITTEN BY ALAN BROCHSTEIN

 

Through most of the first quarter, cannabis stocks were on fire. Unfortunately, the cannabis-rally has fizzled.  Though the sector, as measured by the Benzinga 420 Marijuana Index, has more than doubled since the end of 2013, and is up 300% from the end of 2012, it has dropped about 60% since peaking eight weeks ago. Most stocks have returned to their longer-term moving averages.

Though momentum stocks have been under pressure across the market, the cannabis collapse ties in closely with recently elevated efforts by FINRA and the SEC. While the intent of the SEC to weed out bad actors is good thing for the sector on a long-term basis, their recent actions have left a cloud of uncertainty over the sector that is leading to a broad lack of investor confidence.  

It has been speculated that the SEC could step up its involvement in the sector, and recent haltings have proven to be bad for the sector. Since early March, seven marijuana-related companies have been suspended:

 

 

  • Mar. 5, 2014 Aventura Equities, Inc. (AVNE)
  • Mar. 14, 2014 Petrotech Oil and Gas, Inc. (PTOG)
  • Mar. 21, 2014 Citadel EFT, Inc. (CDFT)

  • Mar. 27, 2014 Advanced Cannabis Solutions, Inc. (CANN)

  • Apr. 10, 2014 GrowLife, Inc. (PHOT)

  • May 7, 2014 Cannabusiness Group, Inc. (CBGI)

  • May 16, 2014 FusionPharm, Inc. (FSPM)

The first three suspensions didn't really faze the market, as none of the companies were considered market leaders.  The suspension of CANN was a shock to traders, as they are one of the largest companies in term of market-cap. The announcement from the SEC also introduced a new twist:  The SEC can suspend a company's trading even when the company itself has not been accused of wrong-doing.  In the case of CANN, the SEC pointed to the potential actions of a third-party.  

The next, and most damaging, suspension was PHOT, considering they were likly the most widely held stock in the sector.  The company, which is a frequent filer with the SEC, had run up from a Q3 low near $0.03 to a $0.78 high in March. Share prices soared because investors embraced the company’s "GIFT" strategy that provides capital to growers. The SEC halt announcement cited "concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in GrowLife’s common stock."

The sixth suspension, CBGI, was less disruptive since the company was not widely held, but Friday’s FSPM suspension pushed the market to recent lows.  The SEC order was much more specific, calling into question the comapny’s accounting. Denver based FSPM appeared to be very busy filling customer orders, but has never filed any audited statements.  Both CBGI and FSPM traded on the OTC Pink Market.

The cost of suspension, which leads to securities falling onto the Grey-Sheets after their two-week halting, is quite high. CANN trades at about 50% of the price prior to its suspension, while the other stocks that have reopened have lost 80% or more of their prior value.  Suspension of trading is bad enough, but it appears the real punishment is in the aftermath, where investors must trade the stocks without bids and offers.  Even if the SEC were to come out with a "clean bill of health", which it doesn't offer, the company is still required to reapply for a market, which takes substantial time.  It is difficult to blame investors for moving to the sidelines in this environment. The bottom-line is that traders are better served than ever in this environment to double down on their fundamental efforts to make sure that the companies in which they are investing are legitimate.

 

This is part one of a five part series with 420 Investor Alan Brochstein. Don't forget to register for the 1st Annueal Cannabis Investor Conference...check it out here!

 

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11 Best Black Friday Deals on Amazon

11 Best Black Friday Deals on Amazon

The best Black Friday deals from Amazon are still coming hard and fast because the holiday is not yet upon us and the mega-retailer prefers to keep consumers on the hook for as long as possible—spending as much money as possible. 

To that end, here are some of the best Black Friday deals from Amazon that you might want to consider today.

Calphalon 10-Piece Pots and Pans Set

Regular Price: $172

Sale Price: $138.88

Calphalon’s 10-Piece Pots and Pans Set is designed with stainless steel, stay-cool handles along with pour spouts. The nonstick surface is PFOA-free and built with hard-anodized aluminum that is both durable and conducts heat extremely well. The set includes 2 fry pans, a sauce pan with cover, saute pan with cover and large stock pot with cover.

Apple AirPods 2nd Generation

Regular Price: $144

Sale Price: $85.49

The 2nd Generation AirPods from Apple connect to all Apple devices and give you an enhanced listening experience. Plus, they come with a case that keeps them safe and allows you to charge them in a secure environment. With over 24 hours of battery life, access to Siri and easy setup, you can start listening to your favorite tunes or podcasts today.

Adidas Ultraboost 21 Running Shoes

Regular Price: $129.98

Sale Price: $89.98

The Adidas Women’s Ultraboost 21 running shoe is perfect for anyone who likes a short run, maybe a 5K, half marathon or more. Coming in several colors and styles, you can slip these shoes on, enjoy the cushioned outsole, sink into the supple insole and secure laces.

Ninja AF101 Air Fryer

Regular Price: $129.99

Sale Price: $97.83

The Ninja AF101 Air Fryer allows you to crisp, roast, reheat and even dehydrate food products faster and cheaper than ever before. It has a 4-quart capacity and offers a wide temperature range along with several time settings so that you can customize each dish to your needs. Plus, all the parts are dishwasher safe.

Beats Solo3 Wireless On-Ear Headphones

Regular Price: $199.95

Sale Price: $99

Beats by Dr. Dre are among the best headphones on the market, and the Solo3 Wireless On-Ear Headphones include the Apple W1 chip, Class 1 Bluetooth and 40 hours of battery time. These headphones even have a built-in microphone and offer an adjustable fit so that you can be comfortable whether you’re listening to an Android or iOS device.

Hoover Power Scrub Deluxe Carpet Cleaner

Regular Price: $198.98

Sale Price: $175.98

The Hoover Power Scrub Deluxe Carpet Cleaner allows you to keep your home spotless and clean up after your pets. The cleaner comes with the Hoover Paws and Claws Deep shampoo and a storage mat to keep the floor dry once it’s put away.

LG CordZero Auto Empty Cordless Stick Vacuum

Regular Price: $999.00

Sale Price: $851.71

The LG CordZero Auto Empty Cordless Stick Vacuum and Wet Mop All in One Tower is designed to work in homes with several pets or children and clean up all the messes that life brings. The battery lasts up to 2 hours, and there’s an extra removable battery that gives you even more cleaning time and power.

Breville Fresh and Furious Blender

Regular Price: $278.60

Sale Price: $199.95

Breville, a top name in blenders and juicers, offers the Fresh and Furious Blender, featuring 50-ounce capacity, Vac Q technology, pre-programmed cycles, LCD display and lid with pull ring. With the Fresh and Furious Blender, you can make everything from a smoothie to a soup and everything in between.

Hot Tools Professional 2000 Turbo Ionic Hair Dryer

Regular Price: $89.99

Sale Price: $55.63

The Hot Tools Professional 2000 Turbo Ionic Hair Dryer is designed for professional use, but it works perfectly in the home. With 1875 watts of power, 6 heat and speed settings and a lightweight design, you can easily style your hair and utilize the diffuser, cut back on the frizz and stretch the 8 ft cord for maximum functionality.

Columbia Heavenly Long Hooded Jacket

Regular Price: $160

Sale Price: $97.38

The Heavenly Long Hooded Jacket from Columbia is designed to be light for everyday use, but it’s heavy enough to protect you from the cold. The plush fleece lining, security pocket, water resistant fabric, 2-way zipper, and zippered hand pockets make the jacket both protective and functional.

ConAir InfinitiPro Hair Dryer

Regular Price: $49.99

Sale Price: $29.99

ConAir is one of the biggest names in hair and beauty, and the InfinitPro is an 1875 watt hair dryer designed for professionals with ceramic technology. The dryer comes with a diffuser and concentrator, and it allows you to blow out your hair just the way they would at the salon.

Deals the Experts Are Hoping For

Experts believe that Amazon’s Black Friday sale could linger for quite some time. It all started with the Prime Early Access sale on October 11 and 12. Previously, Amazon has offered the “Epic Deals” sale that ran through late October. 

This is to say that any sale could come up at any time. 

Even so, those monitoring Amazon are looking forward to a few potential deals, including:

  • Apple Watch
  • AirPods (any generation)
  • MacBook Pro
  • Large, underpriced TVs
  • Amazon Echo
  • More small home appliances (Dyson or Shark vacuums, Instant Pots, etc.) 

While these predictions are based on last year’s Amazon Black Friday Sale, it’s important to remember that most Black Friday sales are fairly consistent and push the products that are most likely to sell.

 

Featured image sourced from Shutterstock

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