Reefer madness blasts pot machine maker's stock sky high
Management: 'Whoa, dude, chill out'
The management of marijuana dispensing machine manufacturer Medbox has asked investors to chill out and get a grip after the company's stock suddenly rose 3,000 per cent to over $215.
"While we are pleased by the share attention, Medbox shares have traded between $2.75 and $3.45 over the past several months," said CEO Bruce Bedrick in a statement. "our fundamentals and market potential are improving, but we temper investor expectations at present price points."
As every medical marijuana users knows, what goes up must come down, and Medbox stock has fallen back to around $100 a share, still up 300 per cent on the week and giving the company a market capitalization of $2.26bn. Certainly the value of employees' shares will float them into a blissed-out weekend.
The cause for this sudden burst of stock euphoria wasn't investors hitting a particularly good strain of Purple Kush, but rather the decision by the states of Colorado and Washington to legalize the possession and use of America's second most valuable cash crop, the demon weed.
Medbox has built a growing business supplying specialized marijuana vending machines to those US states and other countries that have legalized the use of medical pot. Its fingerprint-scanning doobie dispensers make sure that legitimate purchasers aren't left waiting for their man.
How long before this gets hacked?
To be fair, the company also sells a lot of these machines to hospitals and prison dispensaries, but that business could potentially be dwarfed by the profit to be had as everyone in Colorado gets Rocky Mountain High (one of two official state songs incidentally – just sayin'.)
But investors might find that they get less of a profit than they bargained for in the long run. There's plenty of evidence from countries that have taken a more scientific approach to drug policy that legalizing the stuff actually cuts demand as time goes by.
The Netherlands is the most famous example, and the products of this relaxed attitude to cannabis consumption are seen strewn across the coffee shops and canals of Amsterdam 365 days a year. But they're almost all tourists – only 5.4 per cent of locals smoke the drug annually. That rate has been declining steadily, in part because its use is socially stigmatized in most Dutch homes and offices.
Meanwhile in Portugal, which quietly made use of almost all drugs a civil rather than a criminal matter in 2001, an estimated 3.3 per cent of locals spark up a fattie on an annual basis, compared to 10.6 per cent in next-door Spain. Long-term spliffage use has also been falling steady there, too.
It's unclear as yet if the decision by US voters to take a more open-minded view towards drugs will be allowed by the Federal government, but some are predicting an gold rush – Acapulco or otherwise. No doubt there are going to be legal challenges to the decision, but there's a limit to what the Federal government can practically do given its manpower, since it relies so heavily on local police cooperation.
"The voters have spoken and we have to respect their will," Colorado Govenor Hickenlooper said after the population voted for legalization. "This will be a complicated process, but we intend to follow through. That said," he added, "federal law still says marijuana is an illegal drug, so don't break out the Cheetos or Goldfish too quickly."
There is certainly going to be a massive market to address. In Colorado's capital city of Denver there are currently more medical marijuana dispensaries than branches of Starbucks, and the mood of the US in general seems to be moving towards a scenario that Medbox is nicely positioned to take advantage of.
Whatever the long-term outlook, company founder Vincent Mehdizadeh isn't going to let things get too heavy, or be a bread-head over getting flush with funds. He's said those who started up the company will be sharing the wealth.
"We will take steps to attempt to avoid a roller-coaster syndrome, with the stock rising and falling in dramatic fashion," he said. "We are in discussions with our attorneys to determine if we can reward our early investors who believe in our company, by giving them company-owned shares should the price they bought at fall significantly. That's what classy companies do." ®
"legalizing the stuff actually cuts demand"
And that's all we *really* need to know to stop the stupid waste of time, money and resources on the nonsensical and unwinnable "War on Drugs" that too many grandstanding politicians have forced on us!
Re: "legalizing the stuff actually cuts demand"
I'm going to be downvoted to hell for being a 'stoner' but what difference would it make even if it didn't cut demand?
I vaporise so there's extremely little risk of lung disorders because I'm not inhaling carcinogenic smoke. Even if I did smoke the stuff we're talking maybe 1 or 2 in the evening if it's a weekend or been a particularly stressful day (far less than any cigarette smoker is likely to get through). Current smoking laws also mean I can't realistically light up anywhere but my own home. Sure I could light up in an official smoking area but you usually find those at either work (not a good place to be intoxicated) or at the pub where you've already got intoxicated people (though to be honest I find pubs boring). If this stuff was legalised I could stop buying from a supply chain that obviously involves organised criminals at some point and I could start paying tax on my purchases which would benefit you all.
As a foot note, I hate the word 'stoner' not because I'm ashamed but because you lot use it with such venom.
... there is no Madness in Reefer, only in Politics ...
... consider this, Hemp (cannabis, reefer) was used for thousands of, pre-industrial, years as an invaluable crop for making fabric, paper, rope, oils and much, much more ... but hemp's main property, it's durable and strong fibers, was always a main obstacle for using it in an industrial environment. That changed in the early 1930's when a new technique for using hemp pulp for paper-making was developed, by the US Department of Agriculture, and the patenting of the hemp decorticator (a machine that revolutionized the processing of hemp) came about. These innovations reduced the cost of producing hemp-pulp paper to less than half the cost of tree-pulp paper. Which threatened the profit making of DuPont (chemical industries) who held many lucrative patents on manufacturing plastics, tree-pulp paper making and paints that could become valueless if hemp products became widely available, and one billionaire William Randolph Hearst, then the most powerful US newspaper mogul, who owned huge amounts of timber acreage, which monopolized the tree-pulp paper market. No surprise that the Hearst medias began campaigning falsified and exaggerated stories about the "evils of marijuana" ... Reefer Madness ... it is really shocking to see how "easily" private financial interests find their way into law ... worldwide ... without any fact base ... but devastating and long lasting effects ...