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Friday, January 22, 2021

How to Unlock the Squeeze in Medical Marijuana Inc (OTCMKTS:MJNA)

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Medical Marijuana Inc (OTCMKTS:MJNA) is an MMJ player that – it’s no secret – we have had our differences with over the past few months. That said, just because we see this is one as probably the poster child for a confusing story that has all the hallmarks of something that’s unlikely to end well for longer-term investors doesn’t mean it’s not worth watching. There are key levels in play and we would assume lots of short side bets on the tape at this point, given MJNA’s manner of investor relations. Management has continued to pour out new seeming catalysts, as they always do, at an amazing pace. And yet, as we continue to highlight, MJNA has done very little in response.

Our beef with this one can be plainly stated. Here’s a generally reliable principle: If you see a stock on the OTC that sits on the pink sheets for many, many years, and refuses to ever post audited financial results despite making claims of huge financial success and huge potential ahead, all the while continuously diluting shareholders through one machination after another, you are dealing with a very risky stock. Our job at Oracle Dispatch is not just about highlighting potentially interesting high-growth microcap stocks. It’s also about raising the red flag when we see a pattern of behavior that warrants a warning. MJNA, at this point, is just such a stock.

Medical Marijuana Inc (OTCMKTS:MJNA) bills itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high-value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries.

Its subsidiary, Kannaway, LLC, is a network sales and marketing company specializing in the sales and marketing of hemp-based botanical products. Kannaway currently hosts weekly online sales meetings and conferences across the United States, offering unique insight and opportunity to sales professionals who are desirous of becoming successful leaders in the sale and marketing of hemp-based botanical products.

MJNA licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry. It engages in the research and development of cannabinoid-based pharmaceuticals; and marketing and distribution of cannabidiol hemp oil-based products.

In addition, MJNA provides management support and services to cooperatives, collectives, health and wellness facilities, and medical clinics; and consulting and securities services to businesses and individuals in the legal cannabis industry. Further, it focuses on the treatment of pain and other medical disorders with the application of chewing gum-based cannabis/cannabinoid medical products.sportswear and more.”

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As noted above, while the stock is raising just about every red flag we can imagine, we also believe this stock is now probably carrying a massive short position with it each day. While it seems like one destined to end in tears for most carrying large exposure here, that hardly means it will be a one-way trade to the South.

In fact, the company is extremely aggressive on the investor relations side of things. Given what is likely a very aggressive bet against the stock to break under the $0.10 level in sharp fashion (which we think will likely happen at some point), those sitting on too much leverage short may be forced to cover if the company can put the right recipe together.

For what it’s worth, the continued attempts to spark such a move by headlines such as the announcement that “its subsidiary Kannaway, LLC, the first hemp lifestyle network to offer cannabidiol (CBD) hemp botanical products, is recognizing Randy Schroeder as its second Brand Ambassador in Company history to reach the rank of International Director, which requires achieving a minimum of $240,000 in sales per month” are highly unlikely to get the job done.

As we have contended in the past, there is one easy way to get the squeeze going here: get current on financials with an audited series of 10-Qs. The problem here is not about hype. There’s plenty of that. In fact, there’s clearly too much of it.

No… the problem here is about credibility, plain and simple. No one believes anything coming from management here at this point. A move to allow real financial reports and possibly an uplisting off the pink sheets would likely cause a huge scramble by shorts to cover. The only thing stopping that move from there would likely be the massive float of shares on the market. But, one thing at a time.

Now commanding a market cap of $328.14M, MJNA has a reserve ($1.2M) of cash on the books, which stands against about $802K in total current liabilities. MJNA claims to be pulling in trailing 12-month revenues of $10.1M, though these are fully unaudited results from a pink sheet company, which means this is more of a suggestion than a financial fact. To the extent one wishes to accept these numbers as an approximation of reality, then they would imply major top line growth, with y/y quarterly revenues growing at 135.2%. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $MJNA stock, as well as our other breakout picks, sign up for our free newsletter today and get our breakout stock pick!

Disclosure: we hold no position in $MJNA, either long or short, and we have not been compensated for this article.

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