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Wednesday, October 21, 2020

United Cannabis Corp (OTCMKTS:CNAB) Expands Market Footprint

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United Cannabis Corp (OTCMKTS:CNAB) is an interesting high revenue growth player in the cannabis patch, with a wide geographic diversification profile. United Cannabis Stock had recently broken out of a range between $1.35 and $1.75, to fresh 2017 highs in the neighborhood of $2.50. But it closed the week on a fade trade, along with several other prime high-interest cannabis names as the White House pushed out a message of Federal interference with state laws on recreational pot consumption. This fade comes despite some interesting company-specific catalysts. For example, the company just announced that it has signed an exclusive licensing agreement with Vessel Life Sciences to produce and distribute its products, including the award-winning Prana Bio Nutrient Medicinals, throughout Pennsylvania.

According to the release, Vessel Life Science LLC is “dedicated to advancing the use of cannabinoids in medicine, with a focus on the refinement of genetics for medical grade strains of CBD-rich cannabis plants for the commonwealth of Pennsylvania’s patient base. Founded on the principles of patient-driven results, VLS’ mission is to offer the highest quality of products that indisputably prove and reinforce the use of medical marijuana for patient benefits and health advances.” This is further penetration into the Pennsylvania market, which has legalized, and where we haven’t seen as much strong competition emerge. That suggests this may be a sleeper bull story for the company at this point.

United Cannabis Corp (OTCMKTS:CNAB) bills itself as a company that owns intellectual properties related to growth, production, manufacture, marketing, management, utilization, and distribution of medical and recreational marijuana, and marijuana-infused products in the United States.

It also provides consulting and product placement services related to marijuana industry. The company focuses on developing therapeutics, including Prana Bio Nutrient Medicinal products for supplement deficiencies related to the endocannabinoid system, including pain, neuropathy, arthritis, MS, IBS, autism, seizures, eczema, sleep, anxiety, head trauma, opioid dependency, and clinical endocannabinoid deficiencies; and Prana Aromatherapy Transdermal Roll-on line that provides targeted and large surface relief with combinations of aromatherapy.

CNAB has strategic partnerships with WeedMD RX Inc.; Harborside Health Center; and Westside Enterprises, LLC. The company also has a production and placement agreement with Jason Emo and Emotek LLC; licensing and exclusive distribution agreement with DNA Holding, LLC; and consulting and licensing agreement with Marcus Richardson.

The company was formerly known as MySkin, Inc. and changed its name to United Cannabis Corporation in May 2014. United Cannabis Corp was founded in 2007 and is based in Denver, Colorado.

According to company materials, “The Company’s Prana Bio Medicinal products provide patients a way to mix/match cannabinoids for therapeutic purposes. These products, licensed to regulated marijuana dispensaries, are broken into 5 categories that are available in capsules, sublingual’s, and topical delivery methods. The Company uses a patent-pending infusion process utilizing select fatty acids, lipids, and specific combinations of cannabis-derived terpenes to increase bioavailability.”

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As noted above, United Cannabis just announced a broadening of its exposure into the Pennsylvania market, where we have seen lighter competition, and therefore potentially a more robust current opportunity in the cannabis-related trade.

Tony Verzura, United Cannabis’ Chief Technology Officer, went on to say, “Vessel Life Sciences is ideally suited to bring our products to Pennsylvania. Their team has over 30 years’ combined experience across the spectrum of the cannabis industry, including engineered facilities, regulatory compliance, genetics, cultivation, good manufacturing practices, proprietary extraction methods, branding, marketing, and wholesale distribution. Their expertise gives us a distinct competitive advantage as we work to execute a fast and efficient launch of our Prana products and ACT Program throughout the state.”

We’ve witnessed 10% during the past month in terms of shareholder gains in the name. In addition, CNAB has benefitted from a jump in recent trading volume to the tune of more than 140% beyond the average participation level that has characterized action in this name for the past 6 months or longer. In other words, interest in trading CNAB continues to build.

It pays to take note of this fact due to the tight float size in the stock (around 11M shares). As we have covered, ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices just based on the simple economics of supply and demand. Since we last covered the name, United Cannabis Stock has moved -16.5% lower as the fade trade in the high-traffic pot names takes its toll.

Currently trading at a market capitalization of $82.7M, CNAB has virtually no cash on the books, which must be weighed relative to about $932K in total current liabilities. CNAB is pulling in trailing 12-month revenues of $735K. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 98.4%. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of United Cannabis 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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