What could possibly go wrong in this scenario?
You know it must be “news” if an American cannabis company (a public one no less) buys a “California ghost town.” Even CNN is covering it. And on the surface, it sounds like one of those too-good-to-be-true stories that is absolutely in the spirit of a certain international zeitgeist.
Independence. Freedom. Desert. California. Cannabis. Tourism. Nature.
The “ghost town” in question, also known as “Nipton” is apparently a plot of land bought by an LA geologist to get away from people circa the early 1980’s. The 120 acre plot of land also has some absolutely fascinating history. Historical roots involve gold and silver mining plus ranching. Conveniently, it is also close to the Nevada border. It has a hotel, general store and schoolhouse.
What better location to transform into a cannabis farm and health spa, right?
What happens however, when those independent elements all get brought together in one package?
Business Plans And Details Are Important
Despite even mainstream press coverage that has so far been unanimously glowing, there also appears to be a little glitch when it comes to an understanding of what is being offered. A health spa, grow farm and health product factory infused with cannabis sounds like a great idea of course.
But then the questions begin to arise. The spa in question will be offering mineral baths plus cannabis infused water products. Again, not necessarily an unreasonable scenario, but why would anyone do this in the desert? Even with access to underground water that is safe for human consumption or bathing. And of course, this being California and Nevada’s Mojave Desert, water rights and access are issues people still fight and die for. Aquifer levels in California in general, are at critically low points. Agricultural schemes, even if powered by “green energy” in this part of the world are notorious for contributing to the overall water crisis in California at the moment in general. No matter the crop.
And then of course, there are a lot of questions that remain about the company at the heart of all of this. It is not as if American Green does not have a certain distinct whiff all of its own that has nothing to do with the scent of cannabis.
Who Is American Green?
According to hotstocked.com, American Green is also a company to absolutely avoid, even for a penny stock. According to Seeking Alpha, a well-known investor blog in the United States, American Green Inc. is a “scam.” In fact coverage of the company has turned into a near obsession for one of their most regular bloggers who has detailed his interaction with the company in a series of highly amusing and entertaining blog posts. Including recently.
The list of convoluted stock deals, great ideas (including a cannabis vending machine) and all sorts of interesting stock splits, name changes and the like put quite a new spin on the company itself. If not whole concept.
The fact that the mainstream blogosphere just went alight with the story, however, is also what is so interesting. Particularly now. It is not as if American Green, Inc. is hard to find on a simple Google search.
The association with a cannabis themed, Las Vegas inspired health water-powered and themed amusement park/spa knockoff concept, with no doubt historical water rights issues on top of that, no matter how conceptually cool, is certainly a story. But not the one that has so far been widely reported.
Are American Public Markets Ready For Cannabis?
American Green is in fact a company that has skated into the cannabis legalization space with a number of creative (to say the least) schemes so far. Most of them, no matter what the idea at the time, appear to make payroll for the central cast and not much else.
However they are also a direct outcome of the evolution of the cannabis market over time. The fact is that legitimate companies based only in the United States, have limited access to public equity markets there because of the illegality of cannabis at the federal level. In an environment where one of the top advocacy non-profits in the country had its bank account closed recently, trading anything related to the drug is of course also a non-starter. While several tech companies have successfully gone this route at least in terms of the paperwork, they are still not out of the woods yet.
These types of companies however, should not be confused with another development that is also going on simultaneously. The public stocks of a Canadian licensed producer, for example, or one in Germany, are very different than those being offered by say, American Green.
The difference? These companies are not buying towns. They are buying grow facilities and kitting them for instant production that is already spoken for, including by other governments.
Not to mention balance sheets that are a whole lot easier to explain. Starting with the fact that chain of title is not so hard to follow. Not to mention quantifiable return over time, on investment in the same.
[Image credit- Pixabay]