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The Deal: Pot Stocks Are Smokin'

NEW YORK ( The Deal)--Investors are high on pot stocks.

After reports that New York Gov. Andrew Cuomo plans to make the Empire State the 21st state to allow use of medical marijuana, the passage of a new law in Illinois and a petition in Florida to legalize medical cannabis, a variety of marijuana-linked stocks have been on the rise. Colorado and Washington also recently passed laws making recreational use of marijuana legal.

Shares of Mesquite, Nev.-based Cannabis Sativa (CBDS) almost tripled on Tuesday, rising $7.40, to $11.25, before settling at $8 apiece at close of trading on Wednesday.

Last week, the company announced plans to purchase a patent pending on a strain of medical marijuana called CTA from Kush Inc. for $1 million. Cannabis Sativa expects CTA to be the first patented strain of medical marijuana, president David Tobias said in a statement.

Cannabis Sativa said that it's also pursuing an acquisition of Kush, which has said that it plans to produce a line of a cannabis-based cosmetics. Kush's board of directors includes former New Mexico Gov. Gary Johnson; Mike Gravel, a former U.S. senator from Alaska; and Ed Rosenthal, author of "Ed Rosenthal's Marijuana Grower's Handbook."

Medbox produces vending machines for dispensing medical and recreational pot. Its shares almost doubled on Tuesday, rising $33.95, to $73.90, after the company announced it was adding electronic and biometric locks to its equipment. The new features were added to meet the standards of the Canadian medical marijuana market, West Hollywood, Calif.-based Medbox said. Medbox shares settled at $53.10 apiece on Wednesday's close. The company also said it has orders for dispenser products for customers in Colorado, Illinois, Massachusetts, Nevada, Oregon and Washington, contingent on licensing approvals.

Shares of GreenGro Technologies which provides products and services to marijuana nurseries and clinics, almost tripled, rising 33 cents, to 52 cents, giving the Anaheim, Calif.-based company a market capitalization of $61.8 million. Its shares continued to climb Wednesday, closing at 80 cents apiece.

Terra Tech  (TRTC) an Irvine, Calif.-based maker of equipment for marijuana growers, likewise witnessed a two-day increase in its shares, which rose 29.1%, to 23.8 cents, on Tuesday, and closed at 37 cents Wednesday.

In August, the Financial Industry Regulatory Authority urged investors to approach investing in marijuana stock cautiously. "The con artists behind marijuana stock scams may try to entice investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly traded companies that often have little or no history of financial success," Finra warned in its investor alert.

Twenty states and Washington, D.C., allow the use of medical pot and 11 states allow marijuana dispensaries, according to ProCon.org, a website that tracks marijuana legislation. Minnesota, Ohio and Pennsylvania are expected to tackle the issue of medical marijuana this year. Forbes has reported that the medical marijuana industry may be worth $9 billion a year by 2016. Under federal law however, it is still unlawful to use marijuana for any purpose.

--Written by Bill Meagher. 

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