Investors Warned About Canadian Cannabis Stocks

Canadian securities officials are warning investors to be cautious of publicly traded medical marijuana companies.

In a release, the Canadian Securities Administrators said that public companies could be misleading investors about their business plans and employing pump-and-dump techniques to raise their share prices.

Some of these businesses have attracted sizable interest from investors after simply announcing that they are pursuing a license from Health Canada to grow or sell cannabis.

“In many of these cases, just the announcement of intent to develop a medical marijuana business has resulted in an immediate rise in a company’s stock price,” regulators said. “The CSA is concerned investors may face financial harm by purchasing such shares at an inflated price before there is a viable business.”

Health Canada has received more than 850 applications from companies hoping to produce and sell marijuana, however it has issued just 13 business licenses. Many of the prospective licensees, however, are already promoting their businesses publicly.

The widespread media coverage of medical marijuana has driven investors toward the sector, officials said.

“We’re asking people to do their homework,” said Mark Dickey, a spokesman for the Alberta Securities Commission.

The move comes one month after the U.S. Securities and Exchange Commission warned investors about potential fraud in the cannabis sector. That warning was issued after the SEC halted trading of five companies in two months.

2 comments on “Investors Warned About Canadian Cannabis Stocks
  1. Jim Flanagan on

    This is great advice, several seasoned scammers in other sectors are capitalizing on investor’s lack of knowledge in regard to the application process and the expensive administrative burden that comes with a license to produce medical marijuana. Investors should be asking questions about where the company is in terms of the Health Canada MMPR licensing process. The answer should be stage 3 to 5.
    We started the process in August 2013, and I can tell you from personal experience there’s a lot of work and capital required before, during and after the license.
    As a private company Rx Marihuana Canada Inc. is subject to investment exemptions in the province of New Brunswick. Our biggest asset is our integrity, to that end, RxMC is self-financing the initial approval process (First 2 stages of the 5 stage process). We will only take on new shareholders after we reach the ready to build stage.
    A major publicly traded failure (scam) will not be good for legitimate producers or individual investor.
    Good luck and due diligence to all.

    Reply
  2. chester on

    this sounds like another ohh be carefull u might get high stories. if u know nothing about cannabis and the cannabis busness what r u doing writing this shit who is paying u Monsantos,. i call bull shit,. jump in don’t put on your life jacket,. this baby is going through the rooooooofffffff,,,,,,,,,,,,,,,,love doc. bud 00420 license to cure

    Reply

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