6 Cannabis Penny Stocks You Probably Shouldn’t Buy
Last week we wrote an article about a cannabis penny stock we came across that actually had some signs of legitimacy. Would we invest in it? Absolutely not, but people who are dying to invest in cannabis penny stocks because they “think they’re cheap” can. Most retail investors make the mistake of thinking that a stock is cheap based on the literal share price which is probably one of the worst mistakes you can make when you start off investing. The world of penny stocks is becoming so rife with scams these days that we tell our readers with complete conviction that they should absolutely avoid every single over-the-counter (OTC) stock there is and stick to investing in stocks that trade on respectable stock exchanges. That’s what professional investors do. You would never catch a respectable institutional investor ever touching penny stocks. Even FINRA warned investors about this a long time ago:
Even with all the land mines out there, we have countless people that ask us day in and day out “which marijuana stocks to invest in” which we’ve now covered thoroughly. Stick with the new marijuana ETF that came out, or any of the big Canadian growers, or any of the medical marijuana stocks being traded on big exchanges. Consider all the rest to be questionable. Want some examples? Here you go.
Amfil Technologies (OTCMKTS:AMFE)
This $37 million company is involved in 3 different areas of business:
- Gold exploration in Guyana
- Landscaping and snow removal
- Systems and service provider to medical marijuana industry
You can’t make this isht up. That was according to their last filing with the SEC which was back in 2015. They no longer file audited financial statements with the SEC but instead file unaudited statements on the OTC exchange (red flag). Any time you see a collection of disparate businesses like we see above, that’s also a huge red flag. With $65,000 in cash on hand and $4.7 million in accounts payable, those 445 million shares they have outstanding (red flag) are probably going to increase a whole lot.
Cannabis Science (OTCMKTS:CBIS)
Anyone remember this $123 million stock? We first wrote about this company back in January of this year and reported them to the SEC. Incredibly, they’re still trading and the SEC has done absolutely nothing. Those people who didn’t heed our warning would have now lost -51% of their investment over the past 6 months.
Be prepared to lose the rest of that investment if you choose to support what appears to be a criminal enterprise based on the history of the people who run this operation.
Cannasys Inc (OTCMKTS:MJTK)
This $1.58 million company that has over 1.1 billion shares outstanding and they’re looking to sell even more. Incredibly, they’re selling their stock to a firm called Kodiak Capital at a 30% discount to what they’re trading at and then readily admit that Kodiak will sell the shares to any of you muppets out there who think it’s a good idea to buy them so they can net the difference in profit. Look:
We will sell common stock to Kodiak Capital pursuant to the Purchase Agreement at a 30% discount to the lowest closing price of the common stock for the five consecutive trading days immediately preceding our delivery of a put notice to Kodiak Capital to purchase the shares. Kodiak Capital has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Kodiak Capital sells the shares, the price of our common stock could decrease. If our stock price decreases, Kodiak Capital may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.
The audacity demonstrated here by a publicly traded company is truly mind boggling. Here’s the entire filing if you want to learn more about all the individuals involved in this venture.
Grow Condos (OTCMKTS:GRWC)
The idea was to build “grow condos” that provide people with turn-key grow facilities that they can use to grow weed in. What actually happened was this two employee company purchased Lake Selmac Resort in Oregon for $875,000.
They’re looking to purchase additional properties with the $79,042 in cash they have on hand. That’s about all there is to say right now. Read the latest filing yourself and see if you think this operation is valued at the current market cap of $17.75 million.
United Cannabis Corp (OTCMKTS:CNAB)
This company used to be known as “MySkin Inc”, a name under which they provided advanced skincare services. That didn’t work out so well, since in May of 2014 they decided to sell their entire skin care business for $15,000 and move into cannabis related ventures. A group of guys licensed to them a bunch of “knowledge, know-how, methods, and processes” and since then they’ve continued to lose money. This $43 million Company’s latest filing is a complete mess of financial arrangements in which the company tries to do everything they can to stay afloat. Their long term plan is to perform clinical trials on their most promising products which they intend to perform in Jamaica. Just give their latest filing a good read through and see if this is the sort of company you think would make for a good investment. Never go to the websites for any of these companies to do research. Go right to their filings where they are forced to be honest about what sort of progress they are actually making.
Remember our article last week on Hound Labs? Well, just yesterday we received this comment from a certain Bryan Johnson:
1st breathalyzer to measure THC in parts per trillion? Clearly you haven’t heard of Cannabix Technologies out of Canada? Do your research before posting an article.
Why yes Bryan, we have in fact heard of Cannabix. Because of you’re comment, everybody is going to know about Cannabix now. Of course people may have heard of them already, because Cannabix is a $40 million company that spends about 35% of what they spend on R&D for “advertising and promotion”. Formerly known as “West Point Resources”, they suddenly decided to change their business focus in 2014 from mineral exploration to working on a marijuana breathalyzer (red flag). Here are some facts pertaining to that:
- SEDAR Filing – Nearly $500,000 CAD in stock and warrants were given to the President of the Company for a patent application that they intend to license if granted
- Website – Cannabix has an exclusive worldwide license of University of Florida US Patent 8,237,118 in the area of breath analysis of controlled substances.
We’re not sure which of these “technologies” they’re using, but they’ve been “moving quickly” on prototype development for three years now:
We’ll leave you with this statement the company made in their last financial report filing:
There can be no assurance that the Company will be able to produce a product that is technically and commercially feasible.
And in the meantime, Hound Labs, which is backed by notable venture capitalists, is testing their device with multiple law enforcement agencies at the roadside.
It’s important to note that there are probably over 100 OTC cannabis stocks now, each trying to take advantage of the public’s interest in “investing in cannabis stocks”. These are just a few names we found in our email inbox from any number of promoters pushing these names. We would put stock promoters in the same category as we would car salesman, divorce attorneys, serial killers, and HR. Any encounter you have with these types of individuals generally results in a bad experience. All of the information we’ve taken above is solely from the SEC, OTC, or SEDAR filings so it is all factual (unless the companies that filed this information lied which constitutes fraud).
Lastly, our track record in outing OTC scams speaks for itself. We’d like to just preempt the feedback we’ll likely get from this article by saying:
- No, we’re not short any of this garbage (or long).
- That’s not a very nice thing to say.
- Your threats of physical violence fall on deaf ears. Some of our MBAs lift bro.
- No, facts are not libel, and no, your threat to sue us won’t make us take this article down.
Here at Nanalyze, we complement our tech investments with a portfolio of 30 dividend growth stocks that pay us increasing income every year. Learn how to build your own dividend growth stock portfolio in our report on Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.