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
Apr 6, 2013 6:35AM
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Prohibition is a joke.
Now the time to companies like msn stop support for drugfree org, back to reality and support the freedom, because the majority of the population is in favor of pot legalization and the end of the war.
Jan 18, 2013 6:56PM
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Alcohol is the very worst thing for people. Before the 80's killing someone could kill you with a car & by being drunk get away with it before MADD. Even George W.'s wife killed someone while driving drunk & got away with it & it's still legal you just must control your behavior. Smoking pot doesn't kill people & more than likely the worst effect would be paranoia which would keep people inside rather than outside driving around. Alcohol causes violence people fighting for stupid reasons people smoking weed end up laughing about whatever the stupid reason is. Just like anything else you should use common sense. People who say weed causes violence are talking about illegal growth & distribution because of the big bucks to be made. It is common sense for legalization because then the government would get more revenue. Just like people who still make moonshine if caught they are arrested but alcohol is still legal it's just the government doesn't get a cut of the profits. If they could they would outlaw it again but all of our politicians are drunks or cokeheads or something else that affects their judgement. LEGALIZE IT.
Jan 17, 2013 8:57PM
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So 1 lit tobacco cigarette has 4800 chemical compounds with 69 of those carcinogenic (cancer causing). I lit joint of marijuana has 50-70% more cancer causing agents. It has 4xs more tar than tobacco. TCH causes impotence in men and menstration problems in women. Studies have shown that MJ causes infertility in women. It also weakens the immune systems, making it harder for your body to protect itself. 80-90% of those with asthma, COPD and emphysema are caused by smoking, even by casual 2nd hand smoke. 90% of smokers will die painfully from smoking. One sitting with a water bong or even a hookah is equal to smoking 100-400 joints or cigarettes due to inhaling so much more (it is easier cause the smoke is not hot), depending on the lung capacity of the person using. Go ahead, light up.
Jan 17, 2013 8:57PM
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WEEE I live in colorado  gonna get my freak on 
Jan 16, 2013 5:59PM
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MSN...why don't you take this rather tired post and file it away....file 13.
Jan 16, 2013 2:12AM
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I am speaking for 2 family members one who used and one who didn't. Pot is a big help when you can't  keep food down after chemo or radiation, it also helps with one's outlook on pain and the ability to sleep without aids.  I lost both of my family members to cancer but I still believe the one who used had the better outlook on the end of life struggle and until they come up with a cure for cancer ( which I don't believe will be anytime soon ). I think anybody with cancer should open up their mind to trying anything that will make their time any easier. It is a cold world we live in and any help with this problem should be embraced and anything tried in the privacy of one's own home CHILL OUT GRANNY AND ENJOY THE RIDE!!!!!!!!
Jan 14, 2013 7:25PM
Jan 14, 2013 7:05PM
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What group got the lion's share of gold in this country?  What group annihilated American Indians and now, curiously are claiming American Indian ancestry for the "free stuff"?  What group claims rights to all the precious stones and gems(diamonds, rubies, emeralds, sapphires, etc.) in African nations while the people starve to death from poverty?  Now that they've figured out how to reap the greatest rewards from an industry they've often called illegal and a danger to public safety, what has changed about marijuana?  Same ****, different day!!
Jan 14, 2013 6:06PM
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Why is it that no one is getting these companies except white people?  I always knew that when ever there was a way found to make some of the billions of dollars to made from this industry only white people would be the ones allowed to reap the benefits.....as  usual.  What the ****?
Jan 12, 2013 3:04PM
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Follow the money; that old cliche applies here as well. Marijuana is called a weed for a reason & if people can grow their own, the government won't be able to tax it as a consumer product like everything else you buy. That is the biggest reason that it has been illegal all these years- MONEY.
Jan 11, 2013 9:25AM
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Marijuana is not a drug, and it's chemical components are safe, but smoking anything can give you a variety of lung related diseases. Vaporizers' and edible products seem to be a safe way to indulge, there are no known negative results of this type of use. Making all drugs legal is absurd! Mature adults make foolish decisions all the time, drunk driving, adultery, manslaughter,  punishments for these behaviors keeps the majority safe from the temptation of harm. We do need to stop vilifying the use of a relatively innocuous product. There should be some government control such as with alcohol products   since unfettered use of any product can lead to harmful results. Look, even our founding fathers had no issue with the use of Cannabis. We need to be a free nation once again and stick to the principles of liberty, even if certain groups are uncomfortable with certain liberties'' tolerance must be exercised by all citizens who wish to remain free.
Jan 10, 2013 12:59AM
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Take one guy who got drunk the night before coming into work and a guy who got stoned.  Who is going to be more productive?  Yes, it is rhetorical.  Hangovers are not productive.
Jan 10, 2013 12:59AM
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Take on guy who got drunk the night before coming into work and a guy who got stoned.  Who is going to be more productive?  Yes, it is rhetorical.  Hangovers are not productive.
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Nothing the Mexican drug cartels fear more than legalized marijuana in the US.   Marijuana is by far their big money-maker in the US.   But if American corporations such as the tobacco companies start producing legal, government regulated pot, they won't be able to compete.    Personally, I'd prefer it remaining illegal, but the facts are the facts.   Americans prove every day they want  to smoke marijuana and the Mexican cartels are getting rich selling it, despite the drug laws and there is no evidence the government can stop it.    If we legalize, regulate, and cut out the cartels, we at least minimize the terrible harm being done now.
Jan 9, 2013 1:56AM
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Drugs are bad mkay. (as i hit the pipe) legal illegal irrelevant I don't shoot heroin, smoke cigs, or drink alcohol I work hard and if i want to relax with a bowl that's my business. Marijuana can be used for fuel,clothing, rope, medicine ect ect ect if the government is to stupid to cash in that's just sad.
Jan 8, 2013 7:24PM
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Question, If I own stock in a marijuana company that sells it, am i a drug dealer in the feds eyes?  Sounds funny, but think about it.
Jan 8, 2013 7:00PM
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I have to agree the war on drugs has been lost years ago, so why keep spending taxpayers money. If they make all drugs legal then, and keep it controlled by the state. Make it less expensive than what the mexicans drug cartels sell it for it could basically keep them away as there is no money in it anylonger. Now I', not a drug user but if your dumb enough to go use heroin, then your dumb enough to die from it and give your money to the goverment for some other useless program. You would also be labeled as a useless person or waste of spave. Not needed here so you would be a waste of spece and good ridence.
Jan 8, 2013 5:12PM
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I'll tell you WTF,the pharmaceutical companies can't stand the competition. Think they don"t have power in the White House ? Think it over!
Jan 8, 2013 3:07PM
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Right On! The more press we receive on this miracle plant the better. Because it is a Schedule 1 drug (according to the U.S. government, hemp can't even be grown - C'mon government, Nobama can sign the NDAA and all kinds of other crap, but he can't wave his mighty pen and take this off schedule one so we have jobs??? It would provide "instant" taxes and jobs... Aside from curing cancers. Weeds that please can help - look it up.  God knew exactly what HE was doing, hence the number of cannabis strains available.
Jan 8, 2013 11:04AM
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Get ready for the "war on guns" coming soon!
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