Todor Pichurov

Cannabis Science, Inc. (OTCMKTS:CBIS) Climb Cut Short

by Todor Pichurov September 2, 2013
73CBIS_chart.pngThe marijuana sector exploded late last week. Yet another news release sent the stocks of virtually all publicly traded companies into a buying frenzy and prices jumped. On Thursday Cannabis Science, Inc. (OTCMKTS:CBIS, CBIS message board) shifted 10 million shares and closed 14% up. Friday remained volume-heavy but the price froze and after a morning surge, CBIS closed flat.

The initial catalyst for the hype-spike detectable across the sector was quite likely the Thursday announcement that the U.S. Department of Justice will not interfere with state marijuana laws so long as certain provisions are observed. After an extended period of silence from Eric Holder on the subject, during which traders were waiting with baited breath for anything and everything on the hot topic, this news release unlocked another wave of frenzied buying. CBIS, along with just about every other marijuana stock jumped sharply late in Thursday's session.

The surge, like almost all other hype-driven spikes in the recent history of the sector, was followed by a quick cooldown that saw many stocks close red in the very next session - Medical Marijuana, Inc. (OTCMKTS:MJNA) ended Friday nearly 19% down, Growlife, Inc. (OTCMKTS:PHOT) closed 0.5% in the red. CBIS managed to balance it out after a Friday morning further jump and ended the last session completely flat. The reversal is understandable, as many traders disillusioned with the performance of the sector after the original February upheaval may now be using every opportunity to unload their shares. The announcement from Mr. Holder, while positive, is hardly the end-all of the marijuana debate and the legislative utopia that some may have hoped for.

CBIS is also currently classed as a Pink Limited Information company, as the company's Q2 report is overdue, with the most current 10-Q available dated March 31. That report doesn't contain exciting figures either:

  • $8 thousand in cash
  • $1 thousand in Q1 revenues, $128 thousand since inception
  • $1.7 million in Q1 net loss, $88 million since inception

In addition to those dismal numbers the fact, CBIS diluted from 600 million outstanding common shares to 700 million in the span of one year, and the dilution did not manage to bring about increased revenues, so it is very difficult to see the move as anything but overall sector excitement, completely unrelated to the company's performance.

With the latest wave of excitement dying down, it remains to be seen how far the cooldown will bring the prices of the green leaf stocks and whether or not the sector will go through a series of further, smaller hiccups, as it had done in the past.

Comments 1

1. Guest
September 23, 2013, 02:41PM

Quotes I'm long on CBIS!

Type the characters that you see in the box (5 characters).