Medical Marijuana, Inc. (OTCMKTS:MJNA) Cools Down Despite Record Volume
Yesterday’s session was a turbulent one for Medical Marijuana, Inc. (OTCMKTS:MJNA). The ticker rushed up out of the gates and spiked as high as $0.479. Shortly before noon the price took a nose dive and dropped below its last close. Despite churning an all-time record 117 million shares, MJNA found itself 3% in the red by the bell.
The early morning surge can be attributed to a news release informing that Wellness Managed Services, a MJNA subsidiary, ‘reached’ an agreement with MPS Security, a nationwide security provider, to launch a new company named MPS International (MPSI). The new venture will seek to provide a complete security solution for the marijuana industry, from the greenhouse to the dispensary.
The news release underlines that MPSI will also provide ‘nation’s first’ armored car services to cannabis businesses. Even though this situation may soon change as Attorney General Eric Holder explained days ago, at the moment banks are refusing services to pot companies due to federal restrictions. Obviously, storing or moving large amounts of cash or inventory back and forth poses risks and this is where MPSI intends to intervene.
However, it’s not too clear why the press release highlights this as a ‘nation’s first’ thing. Back in the summer of 2013 tension escalated as the DEA allegedly banned armored car services from working with marijuana businesses. This led to an official from the DOJ making a statement in September that the DEA will not be going after armored car services working with legal pot businesses.
Additionally, it’s not too clear what advantage MPSI will have over other security companies that work in the marijuana sector both in the state of Colorado and nationwide. Spending five minutes with Google yields a number of companies offering security services ranging from surveillance to armed guards for brick and mortar dispensaries. A couple of examples are Collective Protective Services (described as a nationwide company on its website) and Canna Security America who also offer video surveillance and backup (a venue of service into which MPSI is actively seeking to expand according to MJNA‘s press release). The website of Medical Marijuana Business Daily actually has a pretty extensive industry directory containing a comprehensive list of similar security companies and the services they offer.
It’s obvious that there is a market for this sort of service and it is much needed due to the opportunities for criminal activity presented by the accumulation of cash. MPS Security too is likely a capable and organized security company. The thing is that businesses across the entire sector are not waiting on MPSI to come and work with them and there is competition already, so while MJNA‘s expansion in this direction is admirable, it will not automatically equal a torrent of money flowing in its coffers.
The initial market reaction in yesterday’s session and the volume accumulation in the morning hours implies that quite a few people got very excited about the stock. With the price stopping its green rush at the same levels it did last February before the drop, the immediate future is just as unpredictable as ever.