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United Cannabis Corp (OTCMKTS:CNAB) Up 150% What Next?

United Cannabis Corp (OTCMKTS:CNAB) Up 150% What Next?
Written by
Jim Bloom
Published on
January 24, 2018
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In our previous analysis, we provided an update on how United Cannabis Corp (OTCMKTS:CNAB) was destined to generate significant returns to shareholders, over the next few years. Barely three months, it appears our analysis was spot on as the medical cannabis company has lived up to expectations as it continues to affirm its credentials in the fast-growing space.150% Surge Investors who took to account our advice have seen their holdings in the stock more than double in value and generated big gains in their portfolios. The stock has risen by more than 150% over the past two months, as seen in the chart below. CNAB Daily ChartWhile the stock has pulled back from its all-time highs of $2.50, it continues to trade in a strong uptrend. We believe the pullback is a minor correction which provides a buying opportunity for investors who missed out on the previous run.With the stock currently trading in the $1.67 handle, it faces immediate resistance at the $2 a share mark, a close above which could see it make a push for the 52-week high of $2.5. On the downside, it faces immediate support at the $1.4 handle, which is a swing low, below which the stock could drop to the $1 a share mark.However, we believe the stock can continue to rise from the current trading levels. Before we look at the catalysts likely to push the stock higher, it is essential for us to briefly review what the company does in its pursuit of shareholder value.United Cannabis Corporation Founded on November 15, 2007, United Cannabis Corporation is a medical cannabis company engaged in the medical spa management business. Through its subsidiary, the company focuses on providing products and services to the cannabis industry.The company owns an intellectual property relating to the legalized growth, production, manufacture and marketing of, medical and recreational marijuana-infused products. One of its lead product is Prana Bio Nutrient Medicinal, a supplement for deficiencies relating to endocannabinoid system, including pain, neuropathy arthritis, and seizure. Stock CatalystsUnited Cannabis excited investors after announcing a deal for the production and distribution of CBD-infused water in Jamaica. The Prana Water is to be manufactured and distributed through the company’s subsidiary Cannabinoid Research & Development Limited in the Caribbean nation.The subsidiary is also working on initiating the production of other products in Jamaica such as the Prana P5 Hemp Bio Nutrient Capsules. The Prana Collection is a cannabis-centric therapy, effective in providing relief from the symptoms of arthritis, neuropathy and acute pain.

"Acceptance of medical cannabis has been considerably faster in Jamaica than the United States, and we established CRD so that we could be a part of the commercialization process. Our production facility is state-of-the-art and we expect our CBD-infused water, as well as our other approved products, will be ready for distribution by the end of the month,” said CEO Earnest Blackmon.

The deal marks the first step in the company’s push to grow its brand on the international scene as it also moves to increase and diversify its revenue streams. Expansion into Jamaica should give the company a competitive advantage as it moves to target other markets such as Canada, Australia, and New Zealand.Increasing production Capacity In a bid to keep up with growing demand for marijuana-related products, United Cannabis Corporation has secured an industrial building in Colorado where it plans to construct a state of the art industrial hemp processing plant. The proposed facility will include extraction, purification, testing and processing equipment and provide secure storage capabilities.The facility will also be used to convert harvested industrial hemp plants into a range of products from pure extracts to capsules and sublingual drops.

"We decided to establish this facility in the face of growing demand for Colorado-grown hemp products. Farmers are dedicating their resources to optimizing grows to yield high-quality plants, but many do not have the expertise or equipment on-site to process the plants and are therefore left to sell their harvest at commodity pricing,” said Mr. Blackmon.

Expansion into Jamaica and Australia, as well as a push for a new production facility, is part of an effort that seeks to accelerate revenue growth. United Cannabis Corporation saw its revenue drop to $164,000 from $189,000 for the period ending June 30, 2017. According to the company, the decline was as a result of the reduction to the changeover in the production process.Rising net loss is another concern that continues to affect the stock’s sentiments among investors. For the stock to remain a darling of Wall Street, the company will have to trim its net loss that currently stands at -$2 million.Bottom Line United Cannabis Corporation is investing an extra $2 million to boost production capacity as it looks to accelerate sales growth. The investment should go a long way in increasing the company’s overall revenue thus propel it back to profitability.It goes without saying that the company has positioned itself to be a key player in the medical and recreational marijuana market that continues to expand. That said, the stock can continue to rise from the current levels which should lead to more shareholder value.We will be updating our subscribers as soon as we know more. For the latest updates on CNAB, sign up below!Disclosure: We have no position in CNAB and have not been compensated for this article.

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