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Jan 29, 2014

Marijuana firm launches IR program

Medical consulting and dispensary provider appoints Hayden IR and RedChip for IR 

The US’s rapidly growing legal marijuana industry looks set to attract more attention from investors as Medbox, a worldwide medical storage and dispensing firm, appoints two independent firms to look after its IR.

The firm, which provides its services to hospitals and other medical institutions, provides much of the technology that US marijuana dispensaries use to remain functional, as well as an industry award-winning vaporizer.

Hayden IR, which already provides IR services for over 300 small-cap companies, and RedChip, which focuses more on research and media opportunities, have been appointed by Medbox to handle its corporate communications and IR going forward.

The marijuana industry is in rude health after recreational use of cannabis was made legal in Colorado in January, alongside New York Governor Andrew Cuomo’s announcement that hospitals in the state would be allowed to dispense the drug to cancer and glaucoma sufferers.

Medbox’s stock price has appreciated by around 250 percent in the past month in the wake of such changes, and remains the third-largest firm by market cap in the industry. Cannavest – the largest – has seen its stock soar by 300 percent, while stock in British firm GW Pharmaceuticals, the second biggest firm of its kind listed on the US market, rose by a third.

Stephen Hart, vice president of capital markets at Hayden IR, adds that 56 percent of Americans already support legalization, and that the trend started this year will spread to the rest of the country.

‘Industry experts predict that 14 additional states will legalize recreational use by adults over the next five years’, Hart adds. ‘Medbox has first-mover advantage in the legal marijuana market with patented technologies and significant industry knowledge and expertise. We look forward to helping Medbox raise its viability and communicate its competitive strengths and market potential to the investment community.’

Dr Bruce Bedrick, CEO at Medbox, predicts similarly rapid expansion in the industry. ‘[The market] is projected to exceed $3 bn in 2014’, he adds. ‘This rapid growth is creating significant opportunities and Medbox is positioned as the first mover and clear industry leader in this burgeoning sector.’

The news comes alongside warnings that soaring valuations for companies involved in the legalized marijuana trade could lead to the formation of a regulatory badlands. The Financial Times reports that the Financial Industry Regulatory Authority (Finra), the securities industry’s self-regulating agency, has reissued an investor alert this month about such stocks. High demand for equity, combined with many companies being in a conceptual or developmental stage, means that most cannot be valued by traditional metrics.

Though Finra warns that such stock could be used in ‘pump and dump’ schemes, no related enforcement cases have been launched, however.