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The SEC considers any stock that costs less than $5 per share a penny stock. Most penny stocks trade on OTCBB and Pink Sheets, which are vulnerable to market manipulation due to the lack of regulation. Companies that are listed on a SEC regulated exchange (i.e. NYSE, NASDAQ, AMEX) must meet certain financial reporting and price requirements to be allowed such listing.
Many of the cannabis companies are ancillary businesses are levered to the growth of the industry. These companies do not actually touch the plant. Cannabis companies do not go public through typical methods. The companies go public through reverse mergers. A reverse merger allows a private company to become public without having to raise capital, which simplifies the process. While conventional IPOs can take months to materialize, reverse mergers can take only a few weeks to complete (in some cases, in as little as 30 days). In a reverse merger, investors of the private company acquire a majority in the shares of the public shell company, which is then merged with the purchasing entity.
- Form 3: Initial statement of beneficial ownership (Insider transactions)
- Form 4: Statement of changes in beneficial ownership (Insider transactions)
- Form 5: Annual statement of changes in beneficial ownership (Insider transactions)
- Form 13D: Notification of a holding of more than 5% of any class of a company's shares by a single investor or group working together
- 10-Q: Quarterly report
- 10-K: Annual report
- 8-K: Interim report which announces any material events or corporate changes that occur between 10-Q quarterly reports.
- OTCQX is the highest tier of the OTC. Companies that trade on the OTCQX meet certain financial metrics, can prove that they are in compliance with U.S Securities laws, provide disclosures, and are sponsored by a professional, independent third party.
- OTCQB has less stringent requirements than the OTCQX tier. Companies that trade on the OTCQB are developmental companies. On May 1, 2014, the OTCQB implemented a one-penny bid price requirement ($0.01) to improve the quality of the tier. To qualify for the OTCQB tier, the CEO or CFO must certify that the reported information is current and accurate and are required to go through an annual verification and certification process. Companies that fall under this tier tend to vary in strength because there are no minimum financial standards.
- OTCPK (OTC Pink) is the lowest tier on the OTC exchange. These companies typically provide limited or no financial reporting information to the SEC. Technical420 does not recommend investing in companies that trade on the OTCPK due to the lack of information provided. Companies that trade on the OTCPK are considered to be beyond speculative. When an OTCPK listed company becomes current with the SEC, they may qualify for the OTCQB if they also satisfy the one-penny bid requirement. There are only a few companies that trade on the OTCPK and are current with their SEC disclosures.
Charlotte's Web is strain of medical marijuana that gained national attention after CNN aired Dr. Gupta's documentary about a little girl named Charlotte who was suffering from over 300 seizures a day. Faced with no other option, Charlotte's family reached out to a family of brothers who cultivated a high-CBD, low-THC strain of marijuana. The strain proved to be an effective form of medicine with little psychoactive side effects. It was named Charlotte's Web after it helped significantly reduce the number of seizures the little girl suffered.
CBD is able to reduce the psychoactive effects of THC in the body by antagonizing the action of THC at the CB1 receptors; CB1 receptors are associated with the psychotropic effects of marijuana. CBD also has antipsychotic properties which can counteract those produced by THC. It can relieve cannabis-induced anxiety as well as anxiety from other causes. Even though it has several unwanted side effects, THC is a vital ingredient for medical cannabis since cannabinoids are more effective when taken together rather than when taken individually.
THC is one of the cannabinoids found in marijuana. It is the psychoactive component responsible for the user feeling “high”. CBD or cannabidiol is another cannabinoid found in marijuana. It does not have psychoactive effects and therefore does not make users “stoned.”
Schedule I substances are those that have the following findings:
- The drug or substance has a high potential for abuse.
- The drug or substance has no currently accepted medical use in treatment in the United States.
- There is a lack of accepted safety for use of the drug or substance under medical supervision
Currently, 27 states and the District of Columbia have legalized medical marijuana, decriminalized marijuana, or both. Also, 4 states have legalized recreational marijuana and 14 states have legalized a limited form of marijuana by allowing patients access to cannabidiol (CBD).
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Technical420 is a subscription service who provides research, analysis, and news on publicly traded cannabis companies. Our goal is to educate subscribers on the risks and rewards of investing in cannabis companies, by separating the leading from the lagging companies.