After voters passed pro-marijuana Amendment 64 in Colorado and Initiative 502 in Washington, legalizing marijuana for recreational use, stocks in marijuana related industries have been reaching new highs. Too high in some cases. In Marijuana Company Medbox Freaks Out After Stock Gets Too High, Joe Van Brussel reports that the management of Medbox warned investors that they had driven the price of its stock far higher than any business logic could justify after its stock rose 3,000% after the election.
On Monday afternoon, Medbox Inc., a small company that makes pot-dispensing vending machines, stock was trading at $42 -- up from $6 last week, right before Marketwatch.com recommended investing in the firm as a proxy to getting into the marijuana business.
That story prompted a 3,000 percent share price spike -- Medbox stock touched $215 before closing at $205 on Thursday. ... "I'm thinking pot smokers shouldn't trade stocks," wrote one former hedge fund manager on Sunday.
After this release, Medbox stock closed at $20 a share, still much higher than the $3 a share prior to the election.
The whole marijuana sector has seen dramatically higher trading since the election.
SearchCore Inc., which operates media, technology and marketing companies -- including WeedMaps -- rose to 52 cents from 30 after the election and then jumped again, closing at 88 cents on Friday. Shares of hydroponics company GreenGro Technologies more than tripled, closing at eight cents on the Friday after the election. Cannabis Science's stock has nearly doubled since the election.
I wonder when we are going to get an ETF in marijuana based stocks?
Tomorrow, I will write about several law enforcement organizations writing to President Obama and Attorney General Eric Holder at the Department of Justice asking the federal government to respect the wishes of the voters. My understanding is that President Obama could reclassify marijuana as a Schedule 3 substance and leave enforcement to be an option of the states, which could nip the growing libertarian movement among young voters in the bud, so to speak.
He should also pardon all non-violent drug offenders in prison which is costing $50,000/per person per year, potentially saving 10s of billions of dollars/year. It's high time we start getting smarter about our failed war on American drug users. We have many messed up people with addiction and other problems, however, Portugal has shown that strategies based on harm reduction, social services, and mental health produce vastly better results than those based on law enforcement and military interventions.
7:28 PM PT: To present a fair and balanced view I should have mention that the possible demise of Hostess Twinkies is bring a lot of the pot smoking community down.