The 'green rush' is on for marijuana companies

Changes in state pot laws are encouraging some cannabis-related companies to go public.

By Bruce Kennedy Nov 14, 2012 3:02PM

Image: Marijuana (Halfdark/fStop/Getty Images)These are heady times for supporters of legalized marijuana as well as those looking to cash in on pot's growing national acceptance. This month, voters in Washington state and Colorado agreed to legalize the recreational use of marijuana for adults. And medical marijuana is currently legal in 18 states and Washington D.C.


Of course, marijuana remains illegal by federal law. But people involved in what some are calling the "green rush" are still looking at business and investment opportunities in cannabis and its production.


And as with nearly all markets, some people are willing to take the risk.


"Think of it as another dot.com explosion," said Bruce Perlowin, CEO of Hemp Inc. (HEMP), in a recent press release.


And according to an investor fact sheet for Medical Marijuana Inc. (MJNA), the current U.S. medical marijuana industry is estimated at $17 billion, with expectations it could grow up to about $29 billion by 2016.

 

"It was almost unthinkable 10 years ago that you would have legitimate, fully reporting to the SEC companies that were in the nature of pure plays, with positions in the medical marijuana industry," says Sterling Scott, CEO of Los Angeles-based GrowLife Inc. (PHOT), a consortium of companies that sells products for indoor growing.

 

Scott, a former federal regulatory attorney, estimates there are about 10 cannabis-related companies currently being traded as over-the-counter stocks. Most OTCs are relatively small and often new companies that don't yet meet the requirements to be listed or traded on exchanges like Nasdaq or the New York Stock Exchange.

 

He breaks down these marijuana sector firms into four groups:

  • Established companies, like GrowLife, that sell equipment and expendables for the cannabis industry.
  • Companies like Medical Marijuana, whose mission, according to its website, is to become the industry's "premier cannabis and hemp industry innovators."
  • Groups like Hemp Inc. that are looking to develop a legal market for the industrial and commercial use of hemp (which contains only trace amounts of marijuana's active ingredient) in products such as paper, oils and cloth.
  • Companies focused on the clinical, medical use of cannabis in areas such as cancer, inflammation and pain treatment.

"The safest position during the Gold Rush in California in the 1800s was to sell (miners) the equipment they needed to go out and explore for gold," explains Scott. "Our company has taken a fairly conservative position, as to the kind of things that we can engage in, because of the federal law position. And we intend, until there's a great deal more clarity on the federal side, to continue to be fairly conservative. But that's not true of all these companies."


So are these small stocks worth an investor's time? It depends on how the future plays out for the sector.


"If the new marijuana laws in Colorado and Washington… are a sign of things to come, if you're a firm that can benefit by this industry being created into a legal and viable industry, then if you can get in early enough, then those stocks may go up in value," says Mac Clouse, professor of finance at the University of Denver's Daniels College of Business.


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465Comments
Nov 14, 2012 7:14PM
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amazing how obonehead will SUE states over immigration laws, but will allow recreational drug use to prevail unabated.  you got what you voted for...a loser
Nov 14, 2012 7:00PM
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this is a topic that will continue for a very long time so keep on sharing your opinons no matter if people agree or not .its this very privledge we need to first uphold then we can  get down in the dirt to grow our solutions one row at a time

Nov 14, 2012 6:55PM
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It's about time!  Does anyone realize that many professionals that you come in contact with everyday and depend on for medical care and many other services have been enjoying this for many years?  Most people who do get up and go to work everyday and contribute to society as well if not better than those who drink alcohol and suffer with a hangover for half of the day. 

 

 And then there is the savings from enforcement and prosecution that will not be necessary for everyday use.  The potential income from taxes alone is good enough reason to stop fighting a losing war on this harmless herb.

Nov 14, 2012 6:43PM
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A whole bunch of liberal pot smokers will become conservative pot smokers when they see the government tax pot to the hilt over the next decade. Look at alcohol and tobacco. Soon we will find that the taxes will never be enough to deal with the new round of social ills that will come to the generation raised on legal marijuana. Indeed, the whole nation is going to pot after all.
Nov 14, 2012 6:42PM
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 The bluegrass of kentucky could become the 'greengrass' as with most of all the  tabacco areas. the growth of hemp/marijuana would replenish the soil and they already have field harvest machinery etc... empty warehouses,abandoned military bases, and scarred hills from overforestation could all benefit. the possibilties are endless. truckers, fieldhands, textiles,botonist,accountants, cottage industry lets look at this with open clear eyes then we can sit back and enjoy that 5oclock spliff!  it is about responsible use and education      lets work together whether you' toke' or NOT cause your next job may depend on the GRASS being greener on this side of the fence  way to go voters               Peace&Understanding
Nov 14, 2012 5:50PM
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I've been saying the same things as brutisbear for years. The govt could also put a big dent in outdoor production by allowing hemp to be grown, pollinating everything in it's path but they don't want to get rid of the drug war because  the enormous prison system in America is very powerful. It completely sets me free to see the reports in the media about the mansions and extreme wealthy lifestyles  the drug lords live. Legalize all drugs and make people responsible for themselves. It would also help greatly if the govt would stop spreading lies about the dangers of cannabis, the reefer madness scare is long ago over. 
Nov 14, 2012 5:49PM
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Why are so many people so eager to get involved in one way or another in the illegal pot business, and spare me the part about "making money".
Nov 14, 2012 5:27PM
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mairjuana jokes and non-sense aside, this is a wonderful possibilty for the US to actually produce and distribute hemp and cannabis and reap the economic rewards.  it's about time we matured and recognized the impact of the laws, social views and acceptance of marijuana. 

I thought the cartels were the 'bad guy' so why are we literally debating such a minute issue?  take the financial stream away from entities such as cartels, end the awful misinformation and use the tax proceeds to fund public programs. 

Nov 14, 2012 5:21PM
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I told you the Markets would drop 4% -6% .........We are at almost 2.5% drop so far.....GET READY the OTHER SHOE WILL DROP...Panasonic just announced 10,000 more will be laid off....Also HHgregg, Best BUY , Radio Shack, Chipotle Mexican Grill,  Sears,  Darden Group, ALL TO DECLARE HUGE LOSSES AND DOWN GRADES. GET READY FOR THE NEXT DOWN TURN IT WILL BE REALLY BAD...!! THIS HOLIDAY SEASON WILL BE THE RECESSION AND MORE LAYOFF'S......DOWN TURN OF ALL SECTORS......GET OUT WHILE YOU CAN...!
Nov 14, 2012 5:00PM
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What will they do about second hand smoke???

Nov 14, 2012 4:58PM
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A further deterioration of our moral fabric. The kicker is if you get pulled over and test positive...YOU WILL GO TO JAIL ANYWAY...!!! Happy smoking because it stays in your system for 2 months try NOT to drive for two months....!!! This world is so mistaken.....THE MAN HAS SOME TRICKS UP THEIR SELVES FOR ALL THOSE POT SMOKERS.....!
Nov 14, 2012 4:56PM
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Iowa is going to drag their feet so long that we will miss out on the industrial hemp aspect of it all

and sadly ITS BEEN GROWN HERE BEFORE !

As up tight and conservative as Iowa is I cant believe that the same sex thing past and we still cant make a SAFER CHOICE and burn one freely , Instead of using alcohol for relaxation and recreation besides all the MEDICAL benefits ?

 

IT IS JUST A PLANT and one that cant harm anyone ? so WTF ?

Nov 14, 2012 4:47PM
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Sooo your mother for having your dumm a
Nov 14, 2012 4:41PM
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Actually- Dupont lobbied for and achieved the prohibition of marijuana. Carpeting used to be made out of natural fibers but the wanted to pump their new oil-derived stain master carpet. What better way than to make your competition illegal?

If anyone still thinks abolishing inheritors and the corporate veil of anonymity is wrong, think again.
Nov 14, 2012 4:31PM
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Maybe we should approach this one with commonsense. An organized growth area for these plants can also yield badly needed fiber for restoring American-made clothing. Hemp clothing is far superior to synthetic stuff in every way. One plant grows as much as 20 feet in a year and requires zero pesticides. Hemp grows in almost any climate and soil. This is a huge opportunity at least for now. When the administrators get to it... it will go up in smoke.
Nov 14, 2012 4:01PM
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I'm buying a Papa John's franchise, and maybe a Pizza Hut, or a Domino's - gettin' in on the ground floor this thing. Gotta consider the number of people with a bad case of the munchies.
Nov 14, 2012 4:01PM
Nov 14, 2012 3:44PM
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There`s a lot of people in the weed business.Every time I see people withdraw $5,000

from the bank I know what they`re up to.We1ve made a lot of money and we never

carried even a $1,000 around.I like the rebates with the credit cards.

Nov 14, 2012 3:43PM
Nov 14, 2012 3:30PM
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Becareful investing in these companies , you know they could go up in smoke
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