Congratulations to all the traders who gambled on marijuana stocks like Medical Marijuana Inc. (PINK:MJNA), Cannabis Science Inc. (PINK:CBIS), and GreenGro Technologies, Inc. (PINK:GRNH) in front of last Tuesday's nationwide polling. Though the biggest focus was clearly on the Presidential race, medical and recreational use of marijuana was on the ballot (in one way or another) in sixteen states, making 2012's election a potential game-changer for stocks like MJNA, CBIS, and GRNH. Though not all the marijuana-centric measures passed, enough of them did to light a real fire under these stocks. Now it's time to shed 'em, and one in particular.
If this seems vaguely familiar, it may be because yours truly has been semi-following the marijuana saga for a couple of weeks, first noting its importance back on October 22nd, and drawing your attention to Cannabis Science and Medical Marijuana as a couple of top ideas. I reiterated the theme on November 7th (the Wednesday after the election), opining how I liked CBIS over MJNA at the time. Sure enough, Cannabis Science shares traveled from $0.05 then to $0.09 by Friday, the 9th, when I suggested taking profits... while the hype felt hot following a relatively successful day last Tuesday, there still wasn't a lot of clarity on how or when the 'yes' votes would directly benefit all these companies. [Eventually it will, but traders are throwing darts in the meantime.]
So what? For the same reason I suggested taking profits on CBIS on Friday, I'm suggesting you take profits on and GreenGro Technologies, Inc. today after Friday's 183% surge. It's a great company, and will certainly benefit from the nation's growing appreciation for (and legalization of) marijuana. But, right now, it's hype only hype that's pushed the stock to new 52-week highs, and hype just doesn't last long enough to let a chart hang onto a gain like this one.
GRNH designs and sells vertical cultivation systems, but also provides management and consulting services. Its products can serve customers as small as those just looking for a backyard solution or as large as those looking for a full-blown rooftop crop solution.
While GreenGro Technologies, Inc. stands to benefit from the fact that marijuana usage was legalized (with restrictions) in for recreational use Colorado and Washington, and medicinal use in Massachusetts, Federal law still says it's illegal in any form. The gray area between states' right and Federal law has meant the Federal government has largely looked the other way when it comes to medicinal use. The approval of pot as a recreational drug in a couple of states, however, may force the Federal government to take a stronger stand, up-ending the hopes that now surround companies like Cannabis Science Inc., Medical Marijuana Inc., and GreenGro Technologies, Inc. Traders may want to take what they can get while they can get it, and then head to the sidelines while the-powers-that-be decide how this is all going to work.