Consulting was the top-performing sector of all marijuana penny stocks in 2014, followed by biotech and infused-product companies, according to Viridian Capital & Research. “There’s a demand now for experts to lead the entrepreneur through the application process, and that demand will continue as these entrepreneurs who are licensed will also need to be taught how to sustain a marijuana business and comply as standards are set along the way,” explained Scott Greiper, founder of Viridian.
Novus Acquisition & Development Corporation (NDEV) was among the penny stock leaders, with gains of 3400%. The consulting company’s outperformance is partly due to an insurance plan aggregated for medical patients that operates like a medical savings plan or loyalty program.
“It’s a network of doctors and dispensaries through which registered medical marijuana patients can save money buying cannabis,” said Michael Swartz, analyst with Viridian.
Other publicly traded consulting companies with outperformance include Medbox (MDBX), which gained 51.8%, and United Cannabis Corp. (CNAB) with gains of 712.5%. “As more states roll out and mimic what Colorado and Washington have modeled in their application process, cannabis consultants will find ways to stay relevant by adding expertise in the areas of software, security and cash management,” Greiper said. “They will become management consulting consultants.”
Overall, the category of marijuana penny stocks was up 105% but the entire gain was in the first quarter of 2014 when recreational use was first legalized in Colorado. The cannabis biotech penny stock sector returned 339% in 2014 compared to 665% for the consulting sector.
“Pharmaceutical-like products in a pill that are infused with THC or CBD, tested and geared towards specific maladies is one of the holy grails of the marijuana biotech sector,” said Greiper. “The biggest hot-button issue in pot biotech is when these pharmaceutical-like pot products will emerge, and what standards and guidelines we might see the FDA require.”
The top performing marijuana biotech stock last year was Abattis Bioceuticals (ATTBF) with gains of 850%. “Abattis is a majority owner in Phytalytics, which got a provisional license to act as a marijuana laboratory in Washington to improve controls around testing of strains for specific diseases and medical conditions,” said Swartz.
When recreational weed was first legalized, edibles (also known as infused products) accounted for up to 10 percent of sales at Colorado dispensaries, but by October, marijuana-infused edibles such as chocolate and soda accounted for 40 percent of sales, according to Viridian research.
“Edibles are the fastest-moving product in dispensaries because lollipops or eating and drinking your drug are perceived as cleaner than smoking it,” Greiper explained. “You don’t have to light it and you don’t have to touch the flower. You can eat an infused brownie on the street legally, whereas smoking a marijuana cigarette on the street in Colorado is illegal.”
Cannabis Sativa (CBDS) and Green Cures and Botanicals (GRCU) were among the top-performing infused products and extracts companies, with CBDS showing gains of 953.3% and GRCU returning 50%. “Cannabis Sativa is a combination biotech and infused products company that acquired Kush, which is researching and developing cannabis lozenges,” said Swartz.