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Wednesday, October 28, 2020

General Cannabis Corp (OTCMKTS:CANN) Weathers Share Resale Ahead of Key Update

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General Cannabis Corp (OTCMKTS:CANN) is a penny play in the cannabis space that continues to be a top trading vehicle for OTC players. The company recently put out word that its Form S-1 resale registration statement relating to the sale of up to 9,000,000 shares of the common stock of the Company by certain selling securities holders was declared effective by the U.S. Securities and Exchange Commission. This is likely weighing on shares of the stock in January.

According to the release, the S-1 will, while effective, permit the selling security holders of General Cannabis to resell shares of common stock of the Company issuable upon exercise of warrants, as described in the registration statement, subject to the prospectus delivery requirements of the Securities Act of 1933, as amended.

General Cannabis Corp (OTCMKTS:CANN) trumpets itself as a company that provides services to the regulated cannabis industry in the United States. The company engages in the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners; and provision of security services, including on-site professionals, video surveillance, and cash transport to licensed cannabis cultivators and retail shops.

It also designs, distributes, and sells apparel featuring graphic designs; and offers consulting services to the cannabis industry that comprise obtaining licenses, compliance, cultivation, logistical support, facility design, and building services. In addition, General Cannabis Corporation provides shared office space, networking, and event services; and leases cultivation equipment and facilities.

The company was formerly known as Advanced Cannabis Solutions, Inc. and changed its name to General Cannabis Corporation in June 2015. General Cannabis Corp was founded in 2013 and is headquartered in Denver, Colorado.

According to company materials, “General Cannabis Corporation is the comprehensive resource for the highest quality service providers available to the regulated Cannabis Industry. We are a trusted partner to the cultivation, production and retail side of the cannabis business. We do this through a combination of strong operating divisions such as real estate, consulting, security, financing and the distribution of important infrastructure products to grow facilities and dispensaries. As a synergistic holding company, our subsidiaries are able to leverage the strengths of each other, as well as a larger balance sheet, to succeed.”

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As noted in the company’s recent release, CANN will not receive any proceeds from the sale of the common shares by the selling security holders. Upon the cash exercise of the warrants, General Cannabis will receive the exercise price of the warrants. The S-1 resale registration statement does not necessitate that the selling security holders sell any shares of common stock acquired as a result of exercising the warrants.

The path to cash from warrants can create a hiccup in a stock’s common share market when it involves such a large position in such a small float stock. However, as we noted last time, we are quickly approaching a real proof-in-the-pudding quarter for the stock. We should get another chance to look under the hood very soon.

We’ve witnessed 28% tacked on to share pricing for the name in the past month, a bounce that has taken root amid largely bearish action over the larger time frame. However, CANN is a stock who’s past is littered with sudden rips. Furthermore, the name has seen interest climb, with an increase in recent trading volume of 12% beyond what we have been seeing over the larger time frame.

It pays to take note of this fact with the stock trading on a float that is extremely small at just 9.2M shares. As savvy traders are well aware, a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.

Now commanding a market cap of $41.7M, CANN has a stash ($1.1M) of cash on the books, which stands against about $1.3M in total current liabilities. CANN is pulling in trailing 12-month revenues of $2.9M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 36.6%. We will update the story again soon as further details emerge. For continuing coverage on shares of $CANN 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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