Source: Marijuana Index Press Release, May 27 2014

DJIA Approaches High, Marijuana Index Closes Week at $3.47 – Banking Hits Tipping Point? – Whistleblower Chairman Writes the SEC

May 27, 2014  The newly weighted MJX Marijuana Index ended a relatively flat week at 3.47 with the Dow Jones Industrial Average closing the week at 16,606 — close to its all-time high of 16,736.

A multi-tiered MJX Marijuana Index and new site design are scheduled to release on or about July 1st, 2014. As previously disclosed, the tiers will include reporting issuers, non-reporting issuers, and Canadian issuers. Patient subscribers to the newsletter will be first to receive details on the new site reveal, and user feedback may be utilized for a beta period. As suggested by MJX Marijuana Index in 2013, the entire public market for marijuana, cannabis, and hemp issuers is running to catch up to itself and now represents more than one hundred companies or more (depending on how one defines a “cannabis company”).

A dizzying chain of deals, SEC trading suspensions, and new market entrants have investors searching for credibility and the most viable opportunities. A simple lesson in supply-and-demand — liquidity has declined this quarter on a per issuer basis as more companies vie for investor attention… Yet liquidity still remains accelerated sector-wide relative to most micro-cap equities, which in turn could fuel financing, acquisitions, and expansion. The logical progression of these public markets should lend to increased investor attention toward company management, business plans, corporate oversight, and market potential.

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Has Marijuana Banking Finally Reached the Proverbial Tipping Point?

After hearing directly from several notable and widely regarded Las Vegas business people on the matter — the chief executive officer of First Security Bank of Nevada is prepared to accept business from forthcoming dispensaries in Nevada. While some banks do reportedly work with marijuana businesses, the banking community is tight lipped in fear of possible repercussions.

According to a KNPR interview which was recently summarized by MMJ Business Daily, First Security Bank of Nevada CEO John Sullivan met with the regional bank board of directors to review recent banking guidance provided by the feds. Asked if the banking guidance suggested the government wouldn’t go after the bank, he replied “absolutely, yes.”

Hemp, Inc. (pink:HEMP) also announced that it would invest $1,000,000 in a banking venture within Colorado. The exact intentions of the venture are unclear per the release, but HEMP CEO Bruce Perlowin stated “we are committed to moving this industry forward and supplying the infrastructure to make it more viable.”

Having a bank publicly announce their intentions to work with marijuana businesses could provide additional support (and possibly, challenges). Banking guidance from the federal government is in stark contrast to the previous position that working with legitimate marijuana businesses was considered money laundering. Even ancillary businesses have come under pressure in the past year from major banking chains, further evidencing the need for a foundation of rules in the industry (but perhaps a significant source of opportunity for regional banks like First Security Bank of Nevada).

This leap of faith from a small bank could create major developments and provide a reading in the tea leaves for a future in cannabis banking. If First Security Bank of Nevada creates problems with the FDIC or regulatory agencies, it will have significant repercussions for an industry desperate for financial infrastructure. It was brave and calculated for CEO John Sullivan — who could one day be viewed as the catalyst which finally brought definitive answers for a cash-flushed industry in desperate need of banking, processing, and lending solutions.

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GrowBLOX Sciences, Inc. Unveils Revolutionary Grow Chamber

As legal marijuana demand increases to align with advances in legislation, supply chains are expected to experience increased burdens for production. Once thought to severely soften prices in Colorado, recreational marijuana initiatives actually caused a demand vacuum in the state which saw prices soar for nearly all consumables. This process should repeat itself as new states enact either medicinal or adult-use guidelines. Producers of every scale will seek means to improve, control, and expand growing operations to meet demand.

Previously dominated by niche players with seemingly cult-like followings, quality hydroponic growing systems should see constant innovation and emerging technologies which improve production processes. One company hoping to position itself is GrowBLOX Sciences, Inc. (otcqb:GBLX). GrowBLOX claims a series of cultivation, production, and medical cannabis industry advantages driven by a modular design which produces consistent, high-quality product by controlling all growing variables in a sterile environment. The company features a diverse business plan outside of the aforementioned hydroponic system, with one subsidiary applying for a cultivation license and two dispensary licenses in Nevada. Those seeking information are urged to visit the issuer website to learn more and reference for public filings.

GrowBLOX (otcqb:GBLX) issued a press release today which detailed more information on their proprietary technology; CEO Craig Ellins stated “we believe our technology is the solution to the growing need and demand in the medical marijuana industry for controlled environments.”

MJX Marijuana Index was paid an advertising fee by a third-party for visual sponsorship of and for visual placement of GrowBLOX Sciences within written materials.

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Newly Appointed Chairmain of Creative Edge Nutrition (pink:FITX) John Germinario Pleads with SEC Regarding Sector Suspensions

After less than a month in office as Chairman, he wasted no time airing grievances directly with the SEC through an open letter posted on the company’s Facebook account. In the letter, he stresses his role as a “financial securities fraud examiner and registered whistleblower with the SEC” — and takes aim at what he seemingly perceives and details as incongruence between the actions toward issuers in the marijuana sector through trading suspensions as compared to inaction toward numerous international banks or big cap issuers in other sectors.

Financial regulatory agencies are in an unenviable position of weighing investor protection against fraud mitigation and adjusting their actions to suit. The elephant in the room, which Germinario points to in both conversational and emotional tone, is the simultaneously unintended but apparent side effect of the trading suspensions: hundreds of millions of dollars sector-wide in evaporated shareholder value or market capitalization. It will be interesting to see how the letter is considered or replied to. One mainstay leader within the cannabis sector believes that the suspensions will serve the public markets well in the long run. Trading suspensions place a burden upon all stakeholders including the enforcement agency — issuers are likely scrambling to expand compliance and oversight measures.

Some companies may choose to emulate practices required for listing on a national exchange, such as the extensive use of independent directors, executive compensation and audit committees, and overall corporate governance measures as detailed by NASDAQ in their posted listing requirements, for example.


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SOURCE: The Marijuana Index

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