General Cannabis Corp (OTCMKTS:CANN) unlike most stocks in the industry is receiving much attention in part because California could become one of the few states to legalize recreational use of the plant. The stock is already up by more than 100% over the past one month as investors take note of the fact that it could be a safe bet in the sector. However, concerns over illegal stock promotional activities could derail the stock’s upward momentum.
California legalizing recreational use in additional to other 8 states legalizing the plant is expected to more than triple the current size of legal cannabis market in the U.S. A Hillary Clinton presidency is also seen as good for the sector given her lenient stance on the use of medical marijuana compared to rival Donald Trump.
Amidst the positives that continue to bolster investor sentiments on the industry, General Cannabis faces major headwinds even as it continues to power higher in the market. OTC market has early last month informed the company that it had become aware of ‘certain promotional activities’ on the stock all but spooking investor sentiments on the stock.
Stock Promotional Concerns
Stock promotional concerns coupled by insider selling of shares sent shivers among investors, who in return fueled a selling spree. A 40% plunge in the market all but brought to light the precarious position the stock finds itself in with the ongoing frenzy in the sector.
The company in a statement to shareholders refuted the claims that it had engaged third party promotional activities to ramp up support for the stock.
“The Company is not aware of the promotional materials’ author or its affiliated entities or persons. The Company’s recent press releases have reported on and provided disclosure of legitimate and ongoing corporate activity only, and are not part of any promotional activities or campaign,” stated Robert Frichtel, CEO of General Cannabis.
This is not the first time that General Cannabis Corp (OTCMKTS:CANN) has found itself in trouble with regulators. In 2014 while operating under the name, Advanced Cannabis the company was among others that were suspendedfrom trading over similar allegations.