Published on: 06/5/16
Hemp penny stock
Will you be buying hemp penny stock anytime soon? CNN advises investors to be cautious, and puts its finger on the pulse with a recommendation to invest in CBD extract company GW pharmaceuticals.
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Lack of business and technical expertise
CNN warns that those who choose to invest their money in medical cannabis companies may see their money go “up in smoke”. Only a handful of the companies offering shares for sale are legit, says CNN. Many of the companies are small, with little business expertise and even less technical know-how.
It’s still illegal under Federal law
Plus there’s still the issue of legality. Although medical cannabis is legal in several states, Federal law still says there’s no way you can conduct a legitimate cannabis business. In Colorado, banks are refusing to deal with proceeds of cannabis dispensaries for this very reason. What if the Fed swoops and confiscates funds? Investors have similar concerns.
Products aren’t standardized
An investment advisor who deals with cannabis stocks says that quality control adds to the issues surrounding a medical cannabis investment. In the US, there are still no accepted standards for cannabis products. You can buy a cannabis edible today, and find that the next batch of the same edible has a completely different cannabinoid concentration.
Big pharma investment the only relatively safe option
GW Pharmaceuticals is the only cannabis stock that CNN’s advisor currently recommends. That’s because the company is in the process of applying for FDA approval for its cannabis drug – an extract of industrial hemp oil known as cannabidiol (CBD) which is currently undergoing trials as a treatment for epilepsy in children.
It’s still a risk
Despite seeming to be set for success with its CBD extract, Epidiolex, GW pharmaceuticals is currently running at a loss. And since its main active ingredient, CBD occurs in natural plants, it may prove difficult to obtain intellectual property rights. Nonetheless, GW Pharmaceuticals is an established company, while many of the hemp penny stock companies aren’t.
Securities Exchange has already cracked down
In 2014, the Securities Exchange suspended trading in five medical cannabis stocks owing to a lack of “publically available information” regarding their operations, and in two cases, as a result of illegal activities that make trading an illegitimate operation.
An industry with future promise?
Aside from the medical cannabis business, there’s also the industrial hemp angle, and some analysts say that big companies like Monsanto may soon enter the hemp business. Then too, alcohol and tobacco stocks have always been strong investments, and many believe that cannabis will soon follow suit.
Not yet a wise investment
For now, analysts say it isn’t yet time to invest in hemp penny stocks. They point out that the dichotomies in US legislation between state and federal laws are cause for concern. Investment in medical cannabis isn’t a safe bet – not if you’re hoping to make money, or at least, avoid losing any. Even pharma companies with cannabinoid based products like GW pharmaceuticals are still pretty risky. Smart investors will be waiting and watching until the time for investment is right.
Disclaimer: Views expressed here do not necessarily reflect those of Endoca and its staff. This article is not intended to provide medical advice, diagnosis, treatment or cure. Endoca CBD products have not been approved by the US Food and Drug Administration (FDA).