Cannabis Science Inc (OTCMKTS:CBIS): Here's Our Take

Cannabis Science Inc (OTCMKTS:CBIS) ran up into the early part of 2017, logging highs in excess of $0.125 mid February from a 2017 open at less than $0.07. As the first quarter matured into the second, however, the company gave back much of its early year strength, and hit as low as $0.057 early last week.Fast forward to the end of the week, and it now looks as though we're seeing a return to the upside momentum. At the Thursday close in the US (we had slightly shortened week on the back of the Easter market break), Cannabis Science traded for $0.08 a piece. That's a 40% run on the weekly lows, and comes on the back of the company's announcing some news related to a cultivation deal in California.So, is this action a turnaround, or just a short term bounce on a longer term downtrend?Here's our take.This one's a cannabis play (as readers have probably guessed by the name) with a primary focus on the medical marijuana sector. Specifically, Cannabis Science has a portfolio of products aimed at serving the cannabis therapeutics market, and right now, this market primarily consists of (from a distribution perspective) dispensaries and healthcare units in California. It's not limited to California, but that's where the progress looks to be coming from now. Not that this is a surprise – the medical cannabis space in the state generates close to $1 billion annually, and it's a natural target for a company trying to establish itself as a sector player.We've covered the stock on quite a few occasions in the past, and readers wanting to catch up with our opinions can do so here.There's basically two sides to this story.One is a long term development arm, as part of which the company is trying to apply its science to a host of big name indications – cancer, HIV/AIDS, neurological conditions.The other is the above noted product sales (palliative care type products, not pharmaceutical grade in the strictest sense of the word), sold through dispensaries) and the infrastructure that supports this portfolio (grow space, research and processing facilities, etc.) It could be argued that this infrastructure is an operational feature in itself, but we'll lump it in with portfolio operations right now.So, it's the second, and specifically, the infrastructure, that's driving the recent run. Cannabis Science just announced that it has negotiated a deal for 250 acres of tribal owned grow space in the San Joaquin Valley, California. The PR that detailed this negotiation has a lot of fluff in it, so we're not going to go into it too much here, but basically, the land is a part of a vertical integration strategy that the company is trying to execute on, and will serve as the central unit for a large grow, research, process and produce operation if and and when everything falls into place.It's good news, sort of. Like we say, there's a lot of fluff in the PR, and while the numbers touted are large (massive, really) there's a lot to do before they are anywhere near to met. For us, however, the release, and the market's response to the release, are supportive of the bias that we outlined last time. Basically, the company is going to really start running when it gets its development pipeline to the mid to late stages. Cancer, neuro and viral infection are all very lucrative spaces, and even if a company hasn’t got an approved asset in these spaces, there's plenty of run room on any hint at efficacy for an asset as it moves through the development pathway. This isn’t going to happen, however, until next year at the earliest. Between now and then, therefore, we need to see some sign that markets are willing to respond to updates and news flow, and these updates are going to come from the above described second arm of the Cannabis Science story.The bottom line here, then, is that markets seem willing to respond to management updates on the so called vertical integration strategy, and the product portfolio numbers, and so long as this holds true, it should carry the company until we start to see some development pipeline catalysts hit press.As a final note: there's a real financing risk here, so keep that in mind ahead of an exposure.We will be updating our subscribers as soon as we know more. For the latest updates on CBIS, sign up below!Disclosure: We have no position in CBIS and have not been compensated for this article.