Executives at many publicly-traded cannabis companies have been selling stock aggressively since the market rally began in September. We had previously reported substantial insider activity at General Cannabis (OTC: CANN), a Colorado-based company, formerly Advanced Cannabis Solutions, that provides comprehensive services to the cannabis industry through its real estate, consulting, security, financing and distribution operating divisions.
On February 9th, the company disclosed through a Form 4 SEC filing, that Michael Feinsod, its Executive Chairman since August 2014, sold 200K shares in a private transaction at $1.25 per share on February 7th, an almost 50% discount to the closing price on the close that day of $2.49. The sale was also a 76% discount to the $5.19 52-week high:
Feinsod, who still holds 1.1mm shares through Infinity Capital LLC and 15,700 shares in his name, sold at a discount because the buyer must hold the shares for six months. Dallas Imbimbo, a co-founder and Chairman of Kush Bottles (OTC: KSHB), has similarly sold shares recently, though at less of a discount to the prevailing price at the time. At 420 Investor, I am reporting insider sales on a large number of companies to subscribers on a daily basis. Some of the most aggressive sales have come from officers or directors at Cannabis Sativa (OTC: CBDS) and United Cannabis (OTC: CNAB).
I have written about 9mm warrants that were issued to 16 individuals previously, with exercise prices ranging from $0.35 to $0.70, and these can now be exercised, so Feinsod’s sale, with the price still well above those levels, may prove to be a good decision. Since we pointed to the insider sales at CANN through October, there have been several others, including the exercise of options and sale of 25K shares by Shelly Whitson, Principal Accounting Officer as well as the sale of 100K shares by Director Peter Boockvar at prices ranging from $3.555 to $4.175 ($3.88 average) between November 15th and November 17th. Additionally, Michael Kelsey, a long-time investor in the company, sold 1.29mm shares at $2.75 on January 30th.
On a fully diluted basis, which includes options and warrants that are well in-the-money, CANN has approximately 33mm shares, giving it a market cap of about $79mm at the current price of $2.40. The company reported sales through Q3 of $2.2mm, with an operating loss of $3.1mm. The large sale at a steep discount by Executive Chairman Feinsod representing 15% of his holdings, the $388K sale by Director Boockvar in November and the large sales in October by CEO Robert Frichtel (100K shares at $3.617) serve as potential signals about management’s expectations for the stock price in the near-term.
