Pot Shares Rally 21% to 1,700% as Speculators See Green

by Nick Taborek, Callie Bost and Nikolaj Gammeltoft, Bloomberg  |  published on January 10, 2014

They’ve got high hopes.

Bruce Perlowin, the chief executive officer of Hemp Inc. (HEMP) who has seen his stock soar 205 percent to 8 cents in the last three days, says investors are suddenly bidding up marijuana companies because they want to find “the next Microsoft.” Robert Frichtel, his Advanced Cannabis Solutions Inc. up 144 percent after posting $455 in sales last quarter, said “euphoria” is driving gains that in some cases top 1,700 percent.

“The demand for marijuana is insatiable,” said Perlowin, a once-jailed smuggler who filed last month to sell 12 million shares of the Las Vegas-based company even as its market value holds at 99.97 percent below the world’s biggest software maker. “You have a feeding frenzy for the birth of a new industry.”

While regulators warn of scams, some of the biggest percentage gains in the stock market this year are being enjoyed by investors speculating on marijuana penny stocks. GreenGro Technologies Inc. (GRNH), which provides management services for medical dispensaries, has soared 1,714 percent to 80 cents. Tranzbyte Corp. (ERBB), which sells pot in Colorado, has gained more than 310 percent in five trading sessions, crossing above a penny for the first time in 11 months.

Frenzy is afoot after Colorado became the first state to legalize sales to anyone 21 and older and New York considered reviving a law to allow some hospitals to use the drug for patients with cancer, glaucoma and other illnesses. Among 10 marijuana-related stocks that have rallied more than 20 percent this year, most are priced below $1 and trade over the counter.

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