American Cannabis Company Inc (OTCMKTS:AMMJ) felt the full wrath of short sellers as the broader cannabis space came under pressure in the first quarter. While the stock has shed more than 25% of market value since the start of the year, the loss cannot be attributed to deteriorating performance.
Just like in our previous update, we remain bullish about the company’s growth prospects. As sentiments in the market improve, American Cannabis is one of the stocks that remain well positioned to spike higher, given the robust fundamentals that continue to fuel upward momentum. The stock has already bounced back from the $0.80 handle to the $ 1 a share mark.
The short-term trend suggests the stock remains susceptible to further declines. However, the share price stabilizing above the $1 a share mark, should open the door for the stock to bounce back to its 52-week high of $1.53. Below the $0.80 mark, the stock could drop to the $0.50 mark.
American Cannabis Business Description
American Cannabis is a company focused on providing end-to-end solutions to existing and aspiring participants in the cannabis industry. The company utilizes industry expertise to assists aspiring businesses create business infrastructure as well as acquire licenses needed to carry out operations in the cannabis space.
In addition, American Cannabis boasts of a diverse portfolio of branded cannabis products including The Satchel SoHum, Living Soils, and The Cultivation Cube.
Investor sentiments on the cannabis market have started to improve on reports the market is experiencing a period of robust growth. Increased legalization and decriminalization of cannabis products has all but opened new opportunities that investors believe big players in the sector can take advantage of.
Valued at about $14.3 billion in 2016, the global legal cannabis market is set to grow at a CAGR of 21.1% between 2017 and 2024, reaching a value of $63.5 billion by 2024. That said the likes of American Cannabis that have already hit the ground running in pursuit of opportunities in the space, remain well positioned to be the biggest beneficiary of the expected growth.
New Distribution Channel
American Cannabis Company has already hit the ground running as it looks to take advantage of the ever growing demand for cannabis products. The company has inked crucial online distribution deals with Walmart Inc. (NYSE:WMT), Home Depot Inc. (NYSE:HD) and Amazon.com, Inc. (NASDAQ:AMZN). The contracts cover the company’s SoHum Living Soils potting Mix and Dr. Marijane Root Probiotic
The products will now be available for purchase in the three retailer’s e-commerce platforms, paving the way for American Cannabis Company to target a broader market.
Terry Buffalo, CEO of American Cannabis Company, commented: “ACC is excited to have the opportunity to offer our products online through these major retailers. We are especially excited to be selling our proprietary SoHum Living Soils® potting mix through these online channels, as we have spent years perfecting our blend, and fine-tuning the messaging around the brand itself.”
Early in the year, American Cannabis Company secured a consulting contract with Cloud 9 Apothecary. Under the terms of the agreement, the company is to acquire an equity stake in Cloud 9’s project that is currently in the development stage.
The project is for the construction of a closed-loop greenhouse containing a 22,000 square foot canopy of premium cannabis cultivars. Construction of the greenhouse will allow Cloud 9 to embark on wholesale cultivation and product manufacturing. The company is striving to become an apex provider of premium cannabis flowers products in California.
“ACC is very happy to have joined forces with Cloud 9 Apothecary as the California market continues to bloom. Our company will work to ensure that this client group has the tools that it needs to thrive in this competitive marketplace,” said Mr. Buffalo.
How Will American Cannabis Fair in 2018
The broader cannabis industry came under pressure early in the year amidst concerns that U.S Attorney General, Jeff Sessions would push for stringent regulations that would make it impossible for cannabis companies to operate.
Fast forward, things have changed, and it appears the industry has the full backing of the Trump administration. President Donald Trump has already confirmed that he will support legislative solutions geared towards protecting states ability to regulate marijuana within their borders.
The proclamation is of great importance given that a number of states have already passed legislation legalizing medical marijuana. In addition, a number of States have moved forth with plans to authorize the recreational use of marijuana.
Given that American cannabis Company came under pressure on investor sentiments from the industry taking a hit, it remains well positioned to bounce back as the normalcy experienced the past two years kicks in. The stock has already started showing signs of trading higher after bouncing back following a recent pullback.
Improving sentiments in the larger industry and investors taking note of the company’s solid fundamentals are the catalysts expected to strengthen investor confidence in American Cannabis Company. In return, the stock should spike higher as investors move to buy the stock on the dip.
Disclosure: We have no position in AMMJ and have not been compensated for this article.