General Cannabis Corp (OTCMKTS:CANN) is a marijuana play we took a close look at twice in the past month. And each time, we noted that CANN stock looked ready to rip higher. The basic premise here is diversification plus access to financing in front of a broad expanding pie scenario for the Company’s target end market.
In fact, this is all about momentum and mojo in the space right now, with nine states heading to their respective ballot boxes to contemplate further legalization of marijuana in just a few weeks. Traders will note about 200% tacked on to share pricing for CANN stock in the past month. This isn’t anything new: CANN has evidenced sudden upward volatility on many prior occasions. Furthermore, the name has seen an influx of interest lately, with the stock’s recent average trading volume running 490% over the long run average. Traders should note this as important with a float in play that’s tiny — under 9M shares. As savvy traders are well aware, a restricted trading float and a jump in trading volume can crimp supply and push share prices higher.
General Cannabis Corp (OTCMKTS:CANN) trumpets itself as a company that provides services to the regulated cannabis industry in the United States. The company engages in the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners; and provision of security services, including on-site professionals, video surveillance, and cash transport to licensed cannabis cultivators and retail shops.
It also designs, distributes, and sells apparel featuring graphic designs; and offers consulting services to the cannabis industry that comprise obtaining licenses, compliance, cultivation, logistical support, facility design, and building services. In addition, General Cannabis Corporation provides shared office space, networking, and event services; and leases cultivation equipment and facilities.
The company was formerly known as Advanced Cannabis Solutions, Inc. and changed its name to General Cannabis Corporation in June 2015. General Cannabis Corporation was founded in 2013 and is headquartered in Denver, Colorado.
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As far as our sense of the expanding pie scenario, we are dealing with the only solid data out there: polls. The most important factor by far is California. According to a recent piece by Cowen & Co., recreational legalization in California alone could well triple the sales footprint CANN stock is floated on. With the LA Times doing two separate polls, and both of them showing a very likely win for the cannabis patch, it’s hard to see a strong impetus to look for a fade here. That said, if the votes do not work out, there will be plenty of impetus there. We have a clear discounting process in place right now and a failure to achieve the key factor (legalization) would be a clear bearish catalyst. However, as it stands, the bulls are in control for CANN stock at present.
For example, if we do see the expanding pie scenario, the jump from a cannabis segment worth $6.8 bln annually to one worth $20.6 bln almost overnight would be hard to miss with this business model.
CANN bills itself as “the all-in-one resource for the highest quality service providers available to the regulated Cannabis Industry. We are a trusted partner to the cultivation, production and retail side of the cannabis business. We do this through a combination of strong operating divisions such as real estate, consulting, security, financing and the distribution of important infrastructure products to grow facilities and dispensaries. As a synergistic holding company, our subsidiaries are able to leverage the strengths of each other, as well as a larger balance sheet, to succeed.”
From a mechanical standpoint, the added attention during this industry-wide momentum into November has likely been aided by the sense that CANN is a sort of “jack of all trades, multi-tentacled pick and shovel tent”, as we called it last time.
Earning a current market cap value of $50.1M, CANN stock trades as an emblem for a balance sheet that will need some healing, with very little cash on the books against an appreciable load ($2.59M) of total accumulated debt. That said, CANN has seen monster top line growth over the past year, with y/y revs jumping 64% on a quarterly basis as of last 10-Q. And that growth should be amplified in the forward year if November 8th unfolds in a manner even close to current expectations. For continuing coverage on $CANN and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!