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Sunday, October 25, 2020

Transitions Define Times at American Cannabis Company Inc (OTCMKTS:AMMJ)

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American Cannabis Company Inc (OTCMKTS:AMMJ) is a micro-cap stock in the marijuana space that has continued to see a ton of focus and attention from OTC traders in the aftermath of the landmark voting last November. We have covered the stock a few times in recent months, and point to it as a core example of the instantiation of a B2B ancillary industry in the cannabis patch. Recently, the company shifted its leadership structure in the way that deserves some attention.

Specifically, the company announced the appointment of Mr. Terry Buffalo as the Company’s Principal Executive Officer effective as of January 1, 2017, and the transition of Mr. Corey Hollister, current CEO, to a client focused role. That sets the table for a more “corporate” agenda this year, with the company’s former COO taking the reigns as the head executive manager of the company in 2017. This is a shift that symbolizes something about the industry as a whole, and we are likely to see a number of parallel instances in the cannabis space this year as the true scale of operations moves up a rung and the industry becomes more established and “legitimate”.

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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Mr. Hollister, a co-founder of the Company, will remain a Director and Co-Chairman of the Company’s Board of Directors. Mr. Hollister will transition to a “Client Services” position with the Company, and focus on meeting the needs of present customers as well as new clients. Additionally, Mr. Hollister will be establishing a Company office servicing the east coast of the United States, focused on the development of new business emphasizing various states including Massachusetts and Maine, which recently passed voter initiatives legalizing cannabis for recreational use, as well as Rhode Island, Connecticut, New York, New Jersey and Maryland, among others, that have existing state run medical cannabis programs in place.

Mr. Hollister commented: “I am excited to return to a hands-on role with our clients and customers, where I can best represent the Company and help the Company’s business grow. Mr. Buffalo’s experience as COO, and his significant background in the securities industry, have positioned him to successfully lead the company. The November 2016 results of state voter initiatives regarding cannabis significantly expands the company opportunities nationally, and I look forward to establishing an east-coast presence to better service and penetrate this high growth region for the company. In addition to the Eastern US, the Atlantic provinces in Canada have been a high growth area and the company will seek to increase its focus on this region as well.”

Mr. Buffalo commented: “I look forward to this challenge. My role during 2016 as the Company’s Chief Operations Officer provided me with the information and experience that will inform and guide my role as Principal Executive Officer.”

In recent action, the listing has seen interest climb, with an increase in trading volume of 11% over the long run average. It pays to take note of this fact with the stock trading on a float that is extremely small at just 2.4M shares. It’s something the veterans know to key on: ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices.

At this time, carrying a capital value in the market of $36.5M, AMMJ has virtually no cash on the books, which must be weighed relative to about $150K in total current liabilities. One should also note that debt has been growing over recent quarters. AMMJ is pulling in trailing 12-month revenues of $2.8M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -31%. As more color becomes clear on the name, we will review the situation and update our take. 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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