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In Late-April, we wrote an article for the MoneyShow about five cannabis stocks levered to the presidential election.
In this article, we discussed the importance of selectivity when it comes to investing in cannabis stocks and how investors must perform thorough due diligence before investing.
We featured five companies in this article: Terra Tech Corp. (TRTC), MassRoots Inc. (MSRT) Pineapple Express Inc. (PNPL), Canopy Growth Corporation (CGC.V) (TWMJF), and GW Pharmaceuticals plc (GWPH)
Of these, we recommended avoiding one at all costs – Pineapple Express.
Hopefully You Listened
Although Pineapple Express has a good name and a decent business model, it lacks the most important component of a successful business – a strong management team with a proven track record.
We have serious concerns about the quality of management. Its co-founder, P. Vincent Mehdizadeh, previously founded Medbox, which is now known as Notis Global (NGBL).
This is the same founder who reportedly sold millions of shares when he did not get his way and also tried to fire Medbox’s management team after they announced plans to re-audit the previous years’ financial statements.
Disaster in the Making
On April 4th, Pineapple Express received a skull and crossbones symbol (also known as a Caveat Emptor) from the OTC markets due to the recent increase in trading activity.
After it received this symbol, management said that it decided to limit its press releases and corporate communications until the symbol was removed.
At that time, Pineapple Express said it intended to file a Form 10 with the SEC to initiate the process of becoming a fully reporting company, which they expected to file within the next 30 days.
Shares Suspended
On April 28th, the SEC suspended trading in PNPL because of recent, unusual and unexplained market activity in the company’s stock that raises concerns about the adequacy of publicly-available information regarding the company.
Shares were scheduled to resume trading on May 12th and yesterday, prior to the resumption of trading, Mehdizadeh issued the following statement:
“The Commission temporarily suspended trading in the securities of PNPL because of recent, unusual, or unexplained market activity in the company’s stock that raises concerns about the adequacy of publicly-available information regarding the company. The SEC’s order alludes to secondary market trading activity in PNPL’s stock, which the Company has no control over. I can confirm that the SEC had not been in contact with the Company, on any matters, prior to the suspension. To date, the Company has not received any written correspondence from the SEC on any matters. The Company’s management is under advice from its SEC compliance counsel not to comment on the suspension and instead focus on getting its financial audit completed and filing of a registration statement with the SEC, which the Company has stated publicly it is in the process of completing. I’m not part of management or the board of directors for the Company but feel compelled to communicate with shareholders in this instance so they are made aware of the circumstances surrounding the suspension.”
Disconnect Between Management and Mehdizadeh
Today, Pineapple Express announced that the press release issued by Mehdizadeh was not drafted, sanctioned, or approved for release by the company, and its contents were solely the personal opinion and analysis of Mehdizadeh, who is not authorized to speak on behalf of the company.
PNPL ended yesterday down more than 45% and we expect to see its shares continue to move lower from here. We continue to recommend avoiding the shares at all costs!
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