One thing seems to be certain, the opportunity for Medical Marijuana, Inc. (PINKSHEETS: MJNA) and Cannabis Sciences, Inc. (OTCBB: CBIS) to find financial success appears to have little to do with whether or not science backs their claims concerning the benefits associated with medicinal marijuana. Even with a growing number of states recognizing the rights of its residents to purchase and administer pharmaceutical grade medical marijuana for therapeutic reasons there remain a number of roadblocks in place that have prevented meaningful growth for these companies.
Obviously the Federal Government has done little to help the medical marijuana industry, consistently moving to shut down medical marijuana dispensaries that were legally opened according to state laws. With the government continuing to insist that these marijuana dispensaries are violating federal drug laws any investment in medical marijuana companies comes with a serious risk.
Additionally, dispensaries are no longer allowed to write off business expenses according to the IRS and their relationship with major and regional banks is essentially non-existent. This despite the fact that marijuana has been shown to alleviate symptoms of a number of serious medical conditions including cancer, glaucoma and AIDS while also being considered an effective alternative to synthetic painkillers.
The Federal Government isn’t the only problem for these medical marijuana companies; it’s obvious that Big Pharma isn’t exactly going to sit back and watch as their pharmaceuticals get supplanted by much cheaper alternatives. Big Pharma will do whatever they can to keep the status quo and their influence will make it difficult for medical marijuana companies to succeed even if science backs the claims of these companies.
Even with the uncertain path ahead investors are clearly willing to take a risk on some of these medical marijuana companies, including MJNA and CBIS. On Tuesday MJNA announced they had reached a finance agreement with CannaBANK Inc (CB) for up to four million dollars in equity for the acquisition and development of several pending technologies, patents and operating businesses. What shouldn’t be ignored by investors is a statement made by MJNA in their most recent filing, noting “over the course of the third quarter the company experienced in the first week of July, its bank accounts being closed, because of the name of the company and its divisions, from The Hemp Network to Medical Marijuana Inc., this also affected our relationship with CannaBANK, BullNBear Group, as well as strategic options, which also caused transactions the company had positioned for acquisition and development to not close which cut our projected revenue by two thirds. We anticipate being able to establish new banking relationships with new institutions, however at this time because of the negative stigma with dispensaries, the banks confuse our companies activities with unlawful activities of certain marijuana businesses. This has caused our revenue for the 3rd and 4th quarters to be a third of what we anticipated, due to the banking regulations and closing of those accounts.”
This should serve as a clear reminder to investors that the road ahead for MJNA will be an uphill battle. They aren’t necessarily fighting facts as much as they are fighting perception and if they are perceived in a certain light then it becomes extremely difficult to change that image.
Much is the same for CBIS but while MJNA has said they have no immediate plans to pursue FDA approval for their products Cannabis Sciences has clearly made that their goal. The likelihood of this taking place remains slim given the Federal Government’s current stance on marijuana.
It’s difficult to take CBIS too seriously given the language they use in their press releases, essentially a rallying cry for change in the Federal Government’s stance. CBIS maintains that one day “all Americans will have access to a safe and effective FDA approved medicine regardless of which state they live in.” While it’s great that they feel that way it does little to change the current state of affairs.
As it stands both MJNA and CBIS continue to see big days of trading volume with Medical Marijuana topping the 45 million mark on Wednesday while Cannabis Sciences exceeded 116 million. That being said MJNA hit a six month high on Wednesday, reaching 0.11 before closing the day at 0.072, well above their 50-day moving average of 0.025 and 200-day moving average of 0.044. CBIS actually hit a 52-week high of 0.2455 on Wednesday but closed at 0.1630, still ahead of their 50-day moving average of 0.0433 and 200-day moving average of 0.0344.
Wednesday’s activity and share price climb are positive but they shouldn’t be considered a sign that the companies are any closer to being on the same page as the Federal Government.