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Thursday, October 29, 2020

Wild Ride for American Cannabis Company Inc (OTCMKTS:AMMJ)

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American Cannabis Company Inc (OTCMKTS:AMMJ) has been a fine example of the rhythm and character of market action when it comes to sector catalysts. There is a lot going on with this name, and we will cover the main ideas below, but we have discussed sentiment-driven action around sector news a lot lately with regard to marijuana stocks, and it’s worth covering again here because the stock’s recent behavior can’t be appreciated properly without considering this perspective.

The news in November of the massive expansion in the legal sales footprint for pot in the US was not only news about eight states. It was a poll among Americans that can probably be extrapolated to many other states in time. That’s a massively big deal for these stocks. But it was highly foreseeable. Many investors could follow published polls and surveys. It was clear in advance that it would pass nearly across the board. Hence, there was an overloaded bet on that passage. This was mostly not a bet on the impact of that passage (which will be huge), but a bet on the news itself happening. That means, once the news hits, for many such investors, it was then time to take those gains to the bank. That “sell-the-news” reaction has stripped about 60% out of AMMJ.

American Cannabis Company Inc (OTCMKTS:AMMJ) promulgates itself as a company that provides solutions for businesses operating in the cannabis industry in the United States and Canada.

It provides advisory and consulting services, including commercial cannabis business planning services, cannabis business license applications, cultivation build-out consulting, cannabis regulatory compliance, compliance audit services, cannabis business growth strategies, and cannabis business monitoring services.

The company also sells products and equipment used in the cultivation, processing, transportation, or retail sale of cannabis. Its product offerings include The Satchel, a pouch-like case designed as a child-proof exit package solution for the regulated cannabis industry; SoHum Living Soil, a just-add-water soil; High Density Racking System, which ensures the proper use of space; The Cultivation Cube, a self-contained and scalable cultivation system; and other products for cultivation operations, medicinal and recreational cannabis dispensary operations, and infused-products.

The company is headquartered in Denver, Colorado.

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The bull thesis with this company is about the rough road for those wishing to enter the marijuana cultivation or sales space. AMMJ provides top-to-bottom solutions to get new players on their way.

That’s why this stock has a chance at real success despite some currently worrying signs like falling revenues and a big y/y drop in cash paired with a lot of advances held on the books. The good news is that, based the signs shown above about the US market for legal pot, there are going to be a whole lot of new players.

Two recent deals auger further in the company’s favor. For example, American Cannabis Company Inc just recently announced it has signed a client in Pennsylvania who will be applying for the state’s upcoming medical marijuana program.

The company expects to leverage this contract to secure additional revenues through long-term consulting agreements, potential sales of ancillary products and services to aid cultivation operations. Corey Hollister, president and CEO of American Cannabis Company, commented: “As the sixth most populated state in the country, Pennsylvania is a major market in the growing medical cannabis framework. Our new client operates with the business acumen and a track record of success from within other sectors, and this experience will be key for them in the effort to realize their goal of operating within Pennsylvania’s new medical marijuana program.”

The company also just inked a deal with a Canadian client for a new design and consulting contract for the purpose of creating a cannabis Licensed Producer facility within the Atlantic provinces. This multi-phase project will begin with the construction of an indoor facility. Operations related to this project will commence with the cultivation of an alternative crop, and then transition to cannabis production as soon as operational licensing is secured. Future plans call for the creation of greenhouses and further indoor expansion.

Earning a current market cap value of $32.8M, AMMJ has minimal cash on the books, in a pool of total assets just under $400K, which must be weighed relative to an appreciable load ($150.00k) of total accumulated debt.

Keep in mind; the listing has registered increased average transaction volume recently, with the past month seeing a bit over 230% beyond its prior sustained average level. Traders should note this as important with the stock trading on a float that is tight at just 16.21M shares. Traders should not overlook this combination, as a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders. For continuing coverage on shares of $AMMJ stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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