The world of marijuana stocks is a shady, shady place. This is something that I have been saying for years now. All of the marijuana stock companies that I have seen so far are nothing but pump and dump models that rely on smoke, mirrors, and hype. These companies either have no end product, or a horrible end product that no one buys or uses.
These companies are easy to spot, as they rely on general claims to hype their stock. I want to see a company offering stock say, ‘Here is my product, it is great, people are buying it, here is math to prove it.’ Instead these companies say things like ‘The industry is growing at a rapid pace. We are in the industry, this is your chance to get in and make a fortune!’ That is just hype, and these types of claims have zero objective evidence to back them up. Yes, the industry is growing at a rapid pace, and yes, there is a lot of money to be made. But how does that specific company and it’s stock fit in that makes it a good buy?
Some of these scammers are getting caught. Per the Seattle Times:
The promoters sued by the SEC are: Mikhail Galas, 25, and Tovy Pustovit, 20, both of Vancouver, Wash.; Alexander Hawatmeh, 24, of Lincoln City, Ore.; and Christopher Mrowca, 25, of Bradenton, Fla.
Galas, Hawatmeh and Mrowca also were charged by federal prosecutors with manipulating, in 2011 and 2012, the stock of ISM International. “During that period the men accounted for 85 percent of the trades in the particular stock related to a purported flea-market business in Florida,” according to the U.S. Attorney’s Office.
The men sent “fraudulent and misleading ‘blast’ emails through promotional websites and email addresses under their control with the intent of increasing demand for the stock,” and then dumped their shares for a profit of $223,000, prosecutors say.
If you are considering buying marijuana stock, be very cautious. I haven’t found a company worthy of my hard earned dollars to buy stock from yet, and I spend more time looking at this topic than most. If it’s too good to be true, it probably is. I’m not saying a legit company isn’t out there, but I haven’t found one yet. If someone has a good company, that offers a quality product/service that people are actually using/buying, I’d love to hear about it.