CannaBusiness Group, Inc. (OTCMKTS:CBGI) Loses Steam

The climbing trend of CannaBusiness Group, Inc. (OTCMKTS:CBGI) ground to a halt, as expected, bucking the long-running trend of buying and enthusiasm. On Wednesday, the rather fresh cannabis ticker retreated by more than 29% to reach $0.295, as selling volumes rose to $9.8 million, matching some of the robust buying from previous days.

CBGI had enough inflows of PR and even a fresh email from Bull in Advantage (Blue Horseshoe Stocks), but that could not bridge the extremely steep trend over the whole week. The correction came on a day when the whole Marijuana index was tending more toward a net loss, with more of the companies in the red. Still, the loss for CBGI is a few times higher than the losses of the indexed companies, and is due to over-hyping in the days that led up to the selling.

CBGI promises to take over the Canadian market, as well as open outlets in the state of Washington, for which there is only a Letter of understanding, and little details on when the actual selling would start. Let’s remember that most marijuana companies rely on future hype, and the idea that cannabis would be legalized in even more states, thus opening up an extremely large market. CBGI plans to serve that market by building and operating specially created, well-protected retail spaces.

This puts CBGI in the pick-and-shovel category, and there are indications that with an additional push, the company might be successful. Its financial situation is somehow modest, but not as dismal as that of other cannabis newcomers, containing:

• $17 thousand cash

• $1 million total current assets

• $3 million total current liabilities

• $1 million revenues

• $816 thousand net loss

At the same time, one of the staples of the marijuana sector, TerraTech Corp. (OTCMKTS:TRTC) is also retreating from the quickly reached peak. TRTC did not have the energy to try to reach $1.30 again, and with a few days of small losses is currently around $1.05.

But “real estate” is certainly not a magic bullet for an easy entrance as a solid cannabis stock selection. In the case of Discovery Minerals Ltd. (OTCMKTS:DSCR), the phrase worked as a charm to propel the ticker to a higher position, an easy achievement at the double-zero levels. DSCR is currently at $0.0048 after a day in the red, but has still kept most of the gains since it exploded upward, growing ten times from $0.0005.

The pattern of a steep climb is not unusual, as the financial results season stirs the interest in marijuana stocks. While there is a retreat from February’s peak enthusiasm, the possibilities still look attractive- but it is best to be aware of the potential for sudden and deep cuts in the stock price, at almost any price level.