This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Investors Flock to Established and Cliquish Marijuana Companies

By Juliette Fairley for MainStreet

NEW YORK (MainStreet) Justin Hartfield and Doug Francis have always had offers from investors who wanted a piece of their marijuana technology company, but since the plant-based Class 1 narcotic was legalized January 1 in Colorado, the number of accredited investors wanting to get in on the ground floor or acquire Ghost Group outright has doubled.

"People have always wanted to invest in our company for $2,000 or $3,000," Hartfield told MainStreet. "Recently, we've seen more investors approach us about making a more substantial investment but we don't have the ability to accept money because we're no longer a publicly traded company."

With the company previously listed on the QZ stock exchange under SearchCore in 2010, Hartfield and Francis regained ownership of their marijuana technology companies in 2012.

"The SEC wasn't going to approve SearchCore's S-1 with marijuana assets so they sold our portion of the business," Hartfield told MainStreet.

Ford S-1 is an SEC filing used by companies planning on going public to register their securities under the registration statement of the Securities Act of 1933.

Although Ghost Group was never publicly boycotted by disgruntled citizens, the added scrutiny and regulation afforded marijuana companies is why Hartfield and Francis plan to stay private.

"I have no intention of taking Ghost Group public right now. We're exploring the possibility, but it's highly unlikely," Hartfield said of his properties and

It's no surprise that investors are frantically in search of investment opportunities with marijuana companies like Ghost Group and that holding companies and partnerships are being formed in rapid succession.

"There's lots of ways to invest, but you need to know someone because most of the deals done are with a handshake person-to-person," Hartfield notes.

Colorado alone stands to gain an estimated $67 million in tax revenues and $600 million in gross sales in the first year.

"What is transpiring with state-sanctioned legal medical and recreational marijuana is a classic case of an emerging market," said Craig Frank, CEO with Alternative Fuels Americas (OTCQB: AFAI). "We believe these developments demonstrate the emergence of a new industry with tremendous potential."

Just last week, Alternative Fuels Americas announced that it had formed a subsidiary called Marijuana Holdings Americas to serve as the foundation for the company's entry into the wildly popular yet controversial market.

"We have always been drawn to early stage changes in sectors that greatly affect the status quo and from which value can be created," Frank said. "This is consistent with our worldview and offers our shareholders an opportunity to benefit from yet another rapidly changing environment."

In 2013, Ghost Group reported $30 million in revenues from marijuana dispensaries advertising on their websites, and yet the company isn't subject to the restrictions of IRS Tax Code 280E.

"I am able to deduct business expenses because I am advertising not selling marijuana," said Hartfield.

Under President Reagan in the 1980s, the IRS created tax code 280E to prevent individuals engaged in drug trafficking from deducting business expenses.

Right now, marijuana businesses in Colorado, Washington, California and the rest of the U.S. are not allowed to take business deductions, which can more than double their tax liability. The tax code barrier to entry remains in effect until marijuana is delisted as a controlled substance.

Written by Juliette Fairley for MainStreet

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs