In our previous review of Cannabis Science Inc (OTCMKTS:CBIS) on June 5, we said that the stock was consolidating before heading higher. To making this bullish claim, we examined catalysts for the stock such as CBIS being cleared to receive US Federal Government contracts.
We noted that working with the US Federal Government could unlock a massive revenue potential for CBIS considering that the US government is a huge spender, which issues more than $192 billion contracts annually.
Since our last update on CBIS, more interesting news has come out that further show that after consolidation, the stock could be set for a powerful takeoff that would leave savvy investors smiling all the way to the bank. Before we get into the details of what else makes us confident that CBIS has bright prospects, have a look at the share price action.
For those not familiar with CBIS, it’s primarily engaged in medical marijuana research and development. It also offers an array of services and solutions to the legal marijuana sector. In its medical marijuana research, CBIS is developing marijuana medicines to treat diseases such as cancer, autism, blood pressure and a broad range of other illnesses.
CBIS has two drug candidates under development. Its drug compound CS-TATI-1 is aimed at patients with drug-resistant HIV strains. The drug will also benefit patients intolerant of available therapies. Its other drug candidate is CS-S/BCC-1, which is being developed as treatment for basal and squamous cell carcinomas. The portfolio of CBIS also includes a proprietary therapy for neurological conditions.
The operations of CBIS already generate consistent revenues and the company has cash to invest in future growth. The balance sheet of CBIS at the end of 2Q17 reflected cash and equivalents of $321,688, a sharp increase from just about $11,000 in a similar quarter last year. Bear in mind that CBIS has no long-term debt on its balance sheet.
On September 14, financial news portal FinancialBuzz.com highlighted a forecast report by Arcview Market Research, which shows that the expansion of legal cannabis market is set to pick up pace in the beginning of 2018.
The report projects that the legal cannabis market will grow at a robust annual average rate of 27% all the way up to 2021. As such, the market is forecast to reach $22.6 billion by 2021, up sharply from $6.7 billion in 2016.
The double-digit growth of legal cannabis market could continue well beyond 2021 as more states and countries legalize cannabis for medical and recreational uses. According to the report, 80% of Americans approve of legalization of medical cannabis and 60% approve of legalization of cannabis for recreational use.
Even in jurisdictions where authorities may have been adamant to lift cannabis prohibition, growing public demand and growing awareness of benefits of legal cannabis are likely to open the legislative doors to cannabis legalization. In the US, for example, states with most mature legal recreational marijuana market have registered a marked drop in marijuana black-market.
At least two things stand out in favor of CBIS from this report: first, the revenue potential for the company is enormous and growing at a decent pace; two, the desired atmosphere for doing business is not only widening but also becoming more conducive as legal marijuana benefits become clearer.
On September 14, CBIS announced the publication of favorable research findings addressing an innovative cannabis drug delivery method. The initial research findings were published in the renowned cancer research journal Frontiers in Oncology.
The research highlighted the strategy to deliver cannabis-based drug safely directly to the cancer cells in order to minimize toxicities or side effects. It is important to note than concerns over toxicities and side effects have long held back widespread adoption of marijuana medicines to treat debilitating conditions such as cancer.
As such, the research raises hopes that these barriers could be overcome in marijuana treatment. Overcoming these barriers could significantly widen the market for marijuana-based drugs and CBIS is well-positioned to take advantage of the opportunity. Here’s what CBIS CEO Raymond C. Dabney had to say about the research:
“Currently, early results show that using smart drug-delivery systems to deliver cannabinoids directly to tumor cells leads to increased tumor cell kill in animal models of lung cancer and pancreatic cancer, which are some of the deadliest cancers.”
In other news, CBIS on September 5 announced positive lab analytics results from the test of first cut plants from its Industrial Hemp Project in San Joaquin Sovereign Tribal Free Land MBS.
The lab test report showed that the strains of the plant being used at the Industrial Hemp Project comply with the regulatory requirements under industrial hemp research projects such as the one being undertaken.
In concluding, we note that the market is there for the products and services that CBIS offers. With consistent revenues, cash on the balance sheet and no long-term debt, CBIS has what it takes to stay around to enjoy the billions of dollars in the legal marijuana market as it delivers short-term gains to savvy investors.
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Disclosure: We have no position in CBIS and have not been compensated for this article.