Marijuana market watch

A man lights a joint on Dec. 10, 2013.

Last week we looked at three marijuana-industry stock pics and how they fared on the first day of trading after retail marijuana sales kicked off in Colorado. Since then early figures indicate that Colorado shops have been dealing an average of $1 million of cannabis per day with the state now predicting that legal marijuana sales will total almost $600 million in 2014, resulting in $70 million in new tax revenues.  All this activity is leading to concerns of shortages and rationing in the near term as demand potentially outstrips supply in some shops.

Investors have been eager to profit off of the new economic movement, but a look at the markets after the first full week of legal retail sales in the U.S. reveals that some of last week’s gains were the result of herd mentality, while others have sustained their rallies.  

Marijuana storage and vending machine business Medbox, Inc. (MDBX) has experienced some of the highest levels of volatility on the market this week with wild swings in its market capitalization.  Valued at around $10 per share just before the New Year, shares of the company peaked at more than $90 shortly after markets opened on Wednesday. The stock ended the week down with shares priced at $35 a pop.

Shares of GrowLife, Inc. (PHOT), a California-based company marketing plant-growing systems and accessories jumped 31% to $0.20 during 2014’s initial day of trading. This week share prices more than doubled, reaching highs on Thursday of up to $0.45 per share, valuing the company at more than $300 million.  However, Growlife’s euphoric rise was stymied shortly after reaching those highs with shares currently selling for $0.22 each in a return to 2013 levels.

Another so called “penny stock” Medical Marijuana Inc. (MJNA) saw its share price more than double to $0.32 last week only to return to $0.19 at the end of last week. Despite some positive volatility that saw share prices reach as high as $0.24 this week, the stock prices end the week slightly down from seven days ago with a Friday close of $0.185. Medical Marijuana Inc. produces pharmaceutical products containing chemical compounds found in marijuana.

Terra Tech Corp. (TRTC) another horticultural company that focuses on indoor hydroponic grow systems has enjoyed explosive growth since the first of the year.  The stock which traded between five and ten cents per share during the fourth quarter soared to $0.45 on Thursday before pulling back to a $0.29 close on Friday, valuing the company at almost $30 million.

Before investing in any marijuana stock it’s important to remember how precarious the market is. Marijuana is still illegal on the national level and according to FBI figures; a marijuana arrest takes place once every 42 seconds in America.  Further, the private Financial Industry Regulatory Authority (FINRA) has recently re-issued its warning against marijuana stock scams that is a must read for any potential investors.