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Another Look At United Cannabis Corp (OTCMKTS:CNAB)

Another Look At United Cannabis Corp (OTCMKTS:CNAB)
Written by
Alex Carlson
Published on
December 29, 2016
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United Cannabis Corp (OTCMKTS:CNAB) is racing up the charts again after establishing strong support at the $1 level. CNAB has been a top pick for pot stock investors this year after trading around the $.25 level during the summer months and then hitting highs of $3.35 in November. With a history of explosive moves, investors are asking if there's enough gas in the tank to challenge the November highs again.First up, a little background on the company. The Company's Prana Bio Medicinal products provide patients a way to mix/match cannabinoids for therapeutic purposes. These products, licensed to regulated marijuana dispensaries, are broken into 5 categories that are available in capsules, sublingual's, and topical delivery methods. The Company uses a patent-pending infusion process utilizing select fatty acids, lipids, and specific combinations of cannabis derived terpenes to increase bioavailability.The latest news from the company is that Tangiers Global LLC has provided the Company with a Fixed Funding Commitment for up to $5 Million. We've not seen the agreement nor a filing with the SEC and the details. The company released a vague press release and the highlight for us was the quote from Justin Ederle, Managing Partner of Tangiers Global LLC, which is a private firm that provides working and expansion funding to small and microcap public companies through a variety of investment structures. He said:

"We are very active in the cannabis sector and are always looking for innovative companies with strong growth potential over the long term. United Cannabis' approach to the market made them a very attractive investment candidate - we were quite impressed with their management team, Prana line, strategic relationships in the US and Jamaica, intellectual property portfolio, and product pipeline. We are confident that our investment will provide United Cannabis the funds needed to capitalize on the many opportunities available to them and we look forward to working with them in that endeavor."

Prior to this news, United Cannabis retired a $600,000 Note payable to Sláinte Ventures LLC. Sláinte also purchased 104,939 shares of the Company's common stock for $100,000. The Company had issued a $600,000 unsecured promissory note bearing interest at 12% to Sláinte back in 2014. Sláinte Ventures has since converted the entire principal amount of the Note into 594,540 shares of the Company's common stock.In Jamaica, the company's JV with Jamaica-based Cannabis Research & Development submitted its application for a license to cultivate, process, transport and conduct research on cannabis within Jamaica. The application was submitted and accepted on November 3. CNAB CEO Earnest Blackmon said:

"This is a significant milestone for our Jamaican team. The cannabis licensing application process is a cumbersome undertaking regardless of the domain. Fortunately, we have a strong business model, considerable experience with the process and a solid partnership with CRD. I am pleased that our application was accepted and expect it will be approved in the near term."

Currently trading with a market cap of $86 million, CNAB has been busy signing deals left and right. The company has been one of the most active cannabis names in terms of partnerships and putting out press releases. This steady stream of PRs has helped keep the stock running and investors excited about the company’s prospects. Further helping the stock is that it’s a low floater with just 12.5 million shares held at DTC.

In looking at the latest quarterly financials ending September 30, we see $265k in revenues, a net loss of $297k, $15k in cash, $187k in total assets, and $2.4m in total liabilities. If CNAB wants to maintain its current market cap, the company needs to greatly boost its revenues, income and balance sheet. We have also seen a lot of insider selling recently as insiders cash in on this run. Investors need to weigh the pros and cons with respect to CNAB. In the short run, investor enthusiasm over marijuana will keep a bid in the stock. Longer term, the company needs to improve its fundamentals. 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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