The medicinal use of marijuana is now legal in 29 states as well as the District of Columbia. Recreational use is now legal in 9 nines, and the District of Columbia. These figures continue to rise, that marijuana is becoming big business is becoming all the more undeniable. For investors looking to get in on this megatrend, there’s one stock that is not only putting up extraordinary growth numbers but is doing so in a completely legal segment of the cannabis market.
There’s nothing illegal about PotNetwork Holdings Inc (OTC:POTN)
Potnetwork Holdings is the holding company for Diamond CBD which it acquired in January 2017. Since then, the company has focused on increasing the product lineup and distribution of Diamond CBD’s menu of cannabinoid (CBD) consumer products. These include everything from vaping cartridges to gummy bears and various other edibles. CBD is non-psychedelic, and legal at the federal level as long as the CBD is not produced on an industrial scale in the US, though some states are moving to change this. PotNetwork sells its products through over its over 10,000 retail partners, its website, and even conferences. Diamond CBD was an exhibitor at the recent TPE 2018 Conference in Las Vegas, from January 30-February 1. The meeting is one of the most significant events of the year for the tobacco, vape, and alternative industries.
The CBD megatrend
Increased use of cannabis, and its growth as an industry has been staggering. According to Marijuana Business Daily, the economic impact of the cannabis industry alone (as opposed to the broader legal marijuana industry) amounted to some $22 billion. Economic value for this year is expected to amount to $31.2 billion this year and will, if these estimates come to fruition, register $58 billion in economic impact in 2022. These are not small sums, Reese’s Pieces generated $66 billion in sales for FY 2017. Increased use of CBD, thanks to its non-psychoactive effects, and POTN’s leadership in the space will pay dividends in the years ahead. The company’s recent financial results, which have been exceptional, very well could turn out to be a small preview.
Bearing fruit
Investors don’t have a lot to go on in analyzing Potnetwork’s performance. This lack of financial clarity isn’t anyone’s fault. Merely a bi-product of its recent entry into the CBD space via its January 2017 acquisition of Diamond CBD and the fundamental truth that it is playing in a very young, fast-growing market. The past should be noted, but it is just that – history. Future returns will come from just that – the future. Even comparing FY 2017’s results to the previous year is fruitless — the entity we have today didn’t exist in its current form until January 2017. What we do have to go on are some impressive financial results. As last year progressed, things just kept getting better and better.
As is the case with many small-cap stocks, audited financial results for the 2H 2017 are not finalized. Verification aside, we have no reason to doubt the company’s unaudited results. Especially given management’s repeated goal of producing approved results and getting that much closer to obtaining a NASDAQ Capital Market Listing – and greater investor exposure. These results for six months of 2017 have been, for lack of a better word, explosive:
The first thing prospective investors should note is that the company is currently paying no income tax. This is due to the company’s accumulated losses, which amounted to over $2.3 million as of June 30, 2017.
Accumulated losses aside, things are looking up for PotNetwork. If the reader is impressed by the above results, they haven’t seen anything yet. The company’s unaudited results of the second half of 2017 and downright awe-inspiring:
While these figures are unaudited, one wouldn’t be crazy for thinking that PotNetwork is on a major growth-streak. The company went from clocking extremely respectable results to kicking things into overdrive. It’s little wonder, then, that its share price began to reflect these enticing results:
Management’s goal is to get audited results out as soon as possible. Taking them at their word, investors should expect a firm update any day.
The odds favor PotNetwork
We’re at just the beginning of what could be a huge market: the legal use cannabinoid (CBD)-derivatives in consumer products. The media is focused on the increased legitimate use of marijuana, but CBD is already legal at the federal level. Producers of CBD products, of which PotNetwork is an undisputed leader, can only benefit from legal marijuana usage.
There are risks. We are still awaiting POTN’s audited financial statements. Perhaps worse, the company’s success could breed competition. Such a scenario may seem far-fetched, but who would have thought Coca-Cola would get into the milk business a decade ago? These are just the immediate concerns that any investor in PotNetwork Holdings should have. These are in addition to the apparent risks associated with such a young enterprise.
Risks aside, PotNetwork is intriguing. It has a unique edge as the market leader in a completely legal, fast-growing industry. This sort of situation doesn’t come along every day. Investors looking to get in on the cannabis megatrend – PotNetwork Holdings should be at the top of the list.