Questionable stock donation made to California marijuana initiative
A penny stock company with no current valuation has pledge $1 million in stock to a California marijuana legalization initiative.
The newly created company going by the name “KUSH” released a statement Tuesday, “The Board of Directors of KUSH, a new player in the medical marijuana field, today authorized the donation of $1 million in KUSH stock to Americans for Policy Reform (AFPR) in support of their 2016 Marijuana Control Legalization and Revenue Act (MCLR) legalization project.”
Currently the most viable legalization initiative is the Adult Use of Marijuana Act (AUMA) and it has the backing of Silicon Valley billionaire Sean Parker. So far the initiative has collected about 25 percent of the necessary signatures. It is currently unknown how many signatures MCLR has.
With AUMA, adults over the age of 21 may possess up to an ounce of cannabis in public (or up to 8 grams of concentrate); can grow up to six plants in their own home or with the permission of their landlord; and may give away up to an ounce to each other free of charge without having to get any license or special permission.
Kush CEO and longtime activist Steve Kubby came out against AUMA however, saying “Virtually everyone who actually reads the 60 pages of controversial regulations in AUMA finds a different problem with it. In contrast, everyone who reads the single page MCLR says, ‘I love it!'”
MCLR poses far fewer restrictions on marijuana, however it is drastically underfunded and lacking in signatures.
Currently NORML, Drug Policy Alliance, Marijuana Policy Project, California Cannabis Industry Association, California Medical Association, and California NAACP, among others, are in support of AUMA.
Mickey Martin with ReformCA, doesn’t like AUMA though, and says that it will “make California the most heavily regulated cannabis industry in the world.” He also believes it will fail because it is too complex and doesn’t actually excite anyone.
East Bay Express reported on the announcement, saying “KUSH stock has no valuation, let alone sales or business record to support it, experts note. Instead, it has the makings of a pump and dump scheme, experts say.”
About 6,500 investors have bought KUSH shares at five cents per share, Kubby said. KUSH is shooting for an IPO on April 20 at ten cents per share or more, he added. The goal is to sell up to 50 million shares.
As part of the press-release, KUSH touted that they have “recently discovered a revolutionary cryogenic extraction process, which when paired with their patent pending genetics, captures the full spectrum of cannabinoids and terpenes. Current products include a non-psychoactive nutraceutical made from their full spectrum extract to provide a better quality of life for people suffering from cancer, gout, arthritis, heart disease, diabetes and other debilitating diseases.”
Kubby acknowledges that the new company has not passed auditing or received full SEC approval, and could be subject to lengthy delays over both issues.
“It’s a very risky investment,” Kubby said. “Never invest in anything that you can’t afford to lose. There is a very real risk in this marketplace. What if the next attorney general is Chris Christie?”
He also acknowledged there is no way to assess KUSH’s value at this time and he predicts about 10 million public KUSH shares must be bought to donate $1 million to MCLR.
Vice reported last year that “investors in small cannabis companies lost $23.3 billion in 2014 because shady stock promoters are capitalizing on the slow tide of legalization in the US by manipulating the penny stock market with “pump and dump” schemes.”