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Marijuana Stocks going to make 2018 relive huge runs of 2014?

 

MJ investors have been offered little comfort from week after week of fear of new SEC halts. Just as things seemed to to be taking a turn for the better for the MJ sector, the week ended with the halt of yet another MJ stock, FusionPharm FSPM. The SEC also released this statement declaring that there is still much fraudulent activity occurring within companies in the MJ sector.

Business Week: Pot bust the sec issues a warning-on marijuana stocks

When CANN and PHOT were halted, it shook the sector confidence hard and many investors ran from the sector. As the bad news continued to pour on for PHOT, even I, a long time investor in the company, folded my hand and sold to salvage a profit. At the end of the day, it came down to the feeling that the risk of owning PHOT now significantly outweighs the potential reward to continue to hold shares of the company.

The MJ investing community appears on edge with many now seemingly sitting on the sidelines waiting for signs that it is safe to come back in. I feel we are in an interesting period of time as there is a dichotomy of SEC induced fear and the upcoming process of Washington State becoming recreational legal expected in July. For now, trade volumes remain low, prices are far lower than they were in February/March, and the SEC seems to be achieving an unstated goal; to shake up the MJ sector and scare investors away from the sector’s publicly traded companies.

The new theme of the MJ sector seems to be ‘find the MJ related company that cannot be halted by the SEC. As much as it is a shame, it seems to be reality. Investors realize how big the MJ industry will be, and amid this continued SEC action in the sector, only the companies that can convince investors they won’t be halted will move up from here in the near term.

It is very unfortunate that investing early in the businesses looking to be on the forefront of the impending MJ industry boom has become so risky. It is very hard to argue though that it hasn’t. The list of SEC suspended MJ tickers tickers now stands at seven and the latest statement signal that they will be continuing to look for fraud in the sector means there are likely more halts on the way.

Although it may be difficult to interpret it this way now, in the long run, the shakeout of poor companies should be a good thing. The strong companies with solid business models absent of fraud will be left standing in the end. But with a serious lack of oversight or need to even comment on their stock halting/investor damaging actions, it appears to me that the SEC/FINRA are outstanding candidates for a high-level fraudulent activity themselves. It makes me as well as many other MJ investors wonder, who is watching the guard?