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Medical marijuana update: Pot stocks down as SEC halts Growlife (PHOT)

Chris Parry Chris Parry, Stockhouse.com
2 Comments| April 10, 2014


News out of the US has put a chill on that country’s medical marijuana sector as Growlife (OBB:PHOT, Stock Forum) has been trade halted by the SEC “because of questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in PHOT’s common stock.”

Growlife responded with a brief statement a few minutes ago, saying "We were not notified in advance, but have contacted the SEC to better understand the basis of the complaint.  We will fully comply with the SEC's requests for information, and continue business as normal during this temporary suspension."

The halt will continue until April 25 and perhaps longer, depending on how quickly the company can satisfy the SEC’s need for paperwork.

Within minutes of Growlife sending out their statement, the Rosen law firm had sent out a class action lawsuit investigation notice, asking investors who had lost money to contact them.

This is the second pot stock that securities regulators have halted, with Advanced Cannabis Solutions having been investigated for questions “regarding whether certain undisclosed affiliates and shareholders of Advanced Cannabis common stock engaged in an unlawful public distribution of securities.”

The market is increasingly concerned that the SEC is going to look deeper into the dozens of other penny stocks diving into the dotbong world. That concern appears to be creeping over the border as Canadian pot stocks are also in the red Thursday.


THE DOWNERS:
The heavily-traded but rarely moving Terra Firma Resources (TSX:V.TFR, Stock Forum) dropped 25% on the day, while Pan American Fertilizer (TSX:V.PFE, Stock Forum) is down 18.1% on news it issued shares to settle $200k of debts.
The investor-neglected Enertopia (CSE:C.TOP, Stock Forum) was down14.2% on low volume selling, and Easton Pharmaceuticals (OTO:EAPH, Stock Forum) is down 12.7% on 4.5m shares traded by noon.


Naturally Splendid (TSX:V.NSP, Stock Forum), who I’ve barely mentioned in this column to date because they’re in the ‘superfood distribution’ business which is of limited importance to many of our readers, is doing a private placement for between $500k and $1.5m. Presumably to make more chocolatehempberry bars or something. Also to keep the doors open, if recent financials are any indicator. Stock down 16.1% on the day.
 


THE UPPERS:
At the other end of town, Windfire Capital bucked the trend, rising 16%, with Modern Mobility Aids (OTO:MDRM, Stock Forum) up 15.3%.
 
Thelon Capital (TSX:V.THC, Stock Forum) woke up trade halted this morning on pending news – and that news came quickly. President and CEO Scott Walters announced the company will work with Net Gram Royalties to fund non-equity deals with licensed producers.

What does this mean? It means if Satori Resources wanted to buy a grow operation but couldn’t raise the money, V.THC and NGR could front the cash and be paid back in weed proceeds.

You know, kind of like how it used to happen on street corners when Cool Kid Krush and his buddy Yo Yo D would skip school and decide to get started in the weed bidness by having Nicky Fingers front a few grams, except now with banker backing.

 To be fair on Thelon, it’s also the model used in the commodities game by companies like Sandstorm and Silver Wheaton. And it does provide diversification of risk and, according to the company, “this type of marijuana royalty potentially provides for significant and tax advantaged cash flow that is free of any operating or capital costs and environmental liabilities and allows for capital risk reduction in gaining exposure to a developing marketplace.” Thelon stock is up SIGNIFICANTLY over the last month, to the point where the exact percentage increase is almost an abstract concept, and trading has just resumed.

 
Abattis Resources (CSE:C.ATT, Stock Forum) has announced it has entered into a share exchange agreement with Experion Biotechnologies, which claims to be in the final stages of MMPR approval. Abattis’ Northern Vine subsidiary, which it 75% owns, is engaged in research and development in the ganjasphere. So the strategic partnership brings two applications together which will lessen the risk of the venture, should only one be approved, and provides a stronger unit should they both get through. Nice move, Abattis.


Affinor Resources (CSE:C.AFI, Stock Forum) added YET ANOTHER heavy hitter to its management lineup today, following on two yesterday and one last week, when it brought in Greg Dennison, the President of Advanced Vertical Farming, as its new Chief Financial Officer. Dennison is a pioneer of the vertical growing concept, which is increasingly being looked at as a way to increase yield in floor space-limited grow operations.

Affinor's share chart echoes my sentiments about this well-staffed, knowledge-heavy team. It's rapidly becoming the murderer's row of Canadian weed, but the big question remains - can they turn their brainpower into a product?
 
 
Supreme Pharmaceuticals (TSX:V.SL, Stock Forum) has announced it will release news of its due diligence on its potential South Okanagan medical marijuana facility on April 15. Mark your calendars – shares are up 7.6% on the news on a generally down day.

 
Tweed (TSX:V.TWD, Stock Forum) issued a note of caution about a quote for the stock showing up as a ‘grey market’ security in the US. Tweed doesn’t trade in the US currently.

Also, the crop that was being transported to the company from an outgoing supplier that was stopped by the RCMP last week will be sent back to the supplier with no fee paid. No further product transfers will go ahead going forward.
The company says it managed to acquire an additional 60 strains, to compliment the 20+ it was already growing, during the procurement process. Shares were marginally down on the news.


NEW PLAYERS:
None! For the first time in weeks, no new company (that I'm aware of) has announced they're jumping in to Canadian weed. Feel free to correct me if I'm wrong, but I see nothing.

UPDATE: Well, that didn't last. Arrowhead Gold (TSX:V.AWH, Stock Forum) is in the mix. They will be "investigating additional company growth prospects. The new areas that will be examined will potentially include, but will not be limited to, agriculture, pharmaceutical, medical technology, and resources." Also raising $640k through a private placement.


INSIDE DIRT:
Missed by many - Papuan Precious Metals (TSX:V.PAU, Stock Forum) and Fission Uranium (TSX:V.FCU, Stock Forum) share the same CEO. Hmmm...


LONGER TRENDS:
The table below shows which companies are trending hardest out of those we're covering, showing price the day we began covering them (usually the day they announced entry into the weed field) and the price now.
Take the percentage gains or losses with a grain of salt, as some companies have been on our list longer than others and some showed large gains before we added them to our list. The value of this information will be greater over time, but here it is.

  COMPANY START NOW % CHG
  1. Seaway Energy Services Inc.   0.025 0.310 1,140.00%
  2. 88 Capital Corp.   0.025 0.240 860.00%
  3. Southbridge Resources Corp.   0.05 0.440 780.00%
  4. Meridex Software Corporation   0.07 0.345 392.86%
  5. Maple Leaf Green World Inc.   0.025 0.075 200.00%
  6. Weststar Resources Corp.   0.035 0.060 71.43%
  7. Affinor Resources Inc.   0.27 0.460 70.37%
  8. Chlormet Technologies Inc.   0.29 0.465 60.34%
  9. Papuan Precious Metals Corp.   0.025 0.040 60.00%
  10. Supreme Pharmaceuticals Inc.   0.05 0.070 40.00%
  ….      
  37. GROWLIFE INC   0.676 0.502 -25.74%
  38. Majescor Resources Inc.   0.11 0.080 -27.27%
  39. ROSTOCK VENTURES CORP   0.10 0.070 -30.00%
  40. Abattis Bioceuticals Corp.   2.10 1.450 -30.95%
  41. Satori Resources Inc.   0.105 0.070 -33.33%
  42. Terra Firma Resources Inc.   0.03 0.020 -33.33%
  43. EASTON PHARMS INC   0.07 0.037 -47.29%
  44. Pan American Fertilizer Corp.   0.19 0.100 -47.37%
  45. Enertopia Corp.   0.92 0.410 -55.43%
  46. PMX COMMUNITIES INC   0.21 0.024 -88.52%
 

TODAY'S MOVERS:
Arrowhead Gold Corp.   0.140 +0.020 +16.67% 10k
Windfire Capital Corp.   0.145 +0.020 +16.00% 101.5k
Majescor Resources Inc.   0.080 +0.010 +14.29% 1,000
Spearmint Resources Inc.   0.100 +0.010 +11.11% 848.5k
MODERN MOBILITY AIDS INC   0.173 +0.017 +10.77% 1.67m
Global Hemp Group Inc.   0.110 +0.010 +10.00% 74.5k
Supreme Pharmaceuticals Inc.   0.070 +0.005 +7.69% 8.31m
Maple Leaf Green World Inc.   0.075 +0.005 +7.14% 171.2k
Bayhorse Silver Inc.   0.135 +0.005 +3.85% 23k
Seaway Energy Services Inc.   0.310 +0.010 +3.33% 2.9k
Meridex Software Corporation   0.345 +0.010 +2.99% 395.91k
88 Capital Corp.   0.240 0.000 0.00% 0
Alchemist Mining Inc.   0.120 0.000 0.00% 0
Ansell Capital Corp.   0.050 0.000 0.00% 0
GROWLIFE INC   0.502 0.000 0.00% 6k
Terra Firma Resources Inc.   0.020 0.000 0.00% 187.8k
Senator Minerals Inc.   0.150 0.000 0.00% 0
Prominex Resource Corp.   0.035 0.000 0.00% 9.6k
Cavan Ventures Inc.   0.045 0.000 0.00% 112k
Chlormet Technologies Inc.   0.465 0.000 0.00% 0
Crailar Technologies Inc.   1.160 0.000 0.00% 0
Jourdan Resources Inc.   0.045 0.000 0.00% 335.9k
Green Swan Capital Corp.   0.110 0.000 0.00% 255.38k
Totally Hip Technologies Inc.   0.200 0.000 0.00% 500
AXE Exploration Inc.   0.050 0.000 0.00% 1.67m
Tweed Marijuana Inc.   3.610 -0.090 -2.43% 1.95m
RANGO ENERGY INC   0.100 -0.003 -2.91% 106.66k
Affinor Resources Inc.   0.475 -0.015 -3.06% 1.49m
PMX COMMUNITIES INC   0.028 -0.002 -5.67% 432.17k
Satori Resources Inc.   0.070 -0.005 -6.67% 200.86k
West Point Resources Inc.   0.065 -0.005 -7.14% 246.59k
NEXT GENERATION ENERGY   0.040 -0.003 -7.62% 301.71k
Pan American Fertilizer Corp.   0.100 -0.010 -9.09% 180.5k
Calyx Bio-Ventures Inc.   0.095 -0.010 -9.52% 955.34k
Southbridge Resources Corp.   0.440 -0.050 -10.20% 15k
Abattis Bioceuticals Corp.   1.420 -0.200 -12.35% 1.09m
Enertopia Corp.   0.410 -0.060 -12.77% 294.73k
Weststar Resources Corp.   0.060 -0.010 -14.29% 1.85m
Pacific North West Capital...   0.080 -0.015 -15.79% 80.55k
Thelon Capital Ltd.   0.105 -0.020 -16.00% 5.02m
EASTON PHARMS INC   0.036 -0.007 -16.51% 11.32m
ROSTOCK VENTURES CORP   0.070 -0.014 -16.67% 516.84k
Next Gen Metals Inc.   0.290 -0.060 -17.14% 263.45k
Papuan Precious Metals Corp.   0.040 -0.010 -20.00% 741.26k
Naturally Splendid Enterpr...   0.235 -0.075 -24.19% 218.2k
 


Check back daily for the latest news in this sector.

For more stories on this sector, see our Medical Marijuana section.

Follow me on Twitter at @ChrisParry

Send tips, news, suggestions to chris(dot)parry(at)stockhouse(dot)com


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Comments

Zimzamzoom
After the high comes the higher And they will rule That would be your GOV
1 star
April 10, 2014
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CrashCab
V.WER currently in advanced negotiations with a licensed privco grow-op. Retired RCMP officer/expert in the field working closely with them. My money is on these guys! All the ducks lining up nicely.
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April 12, 2014
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