Medical Marijuana Subsidiary PhytoSphere Outsources Oil Production

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On Friday, one of the first public companies to try to capitalize on the marijuana legalization wave -- aptly named Medical Marijuana,  (NASDAQOTH: MJNA  ) , announced that its 80%-owned PhytoSPHERE Systems subsidiary has entered into a transaction with hemp-extract company CannaVEST.

Specifically, PhytoSPHERE is selling certain assets to CannaVEST for $35 million, payable in cash or CannaVEST stock in five quarterly installments beginning Jan. 31 and ending Dec. 31. The assets being sold include "equipment and inventory, Web domain names, phone numbers, and all existing and pending agreements with hemp production and processing facilities," along with the grant of a license to use PhytoSPHERE brand names and logos.

The first installment payment, transferred on Jan. 29, shows how the agreement works in practice. CannaVEST issued 900,000 shares of stock, valued at $5 each, to PhytoSPHERE. PhytoSPHERE then transferred 720,000 of these shares to MM based on MM's 80% ownership interest in PhytoSPHERE.

PhytoSPHERE explains the logic behind the transaction as "eliminating ... substantial capital commitment required by our production facilities" by shifting raw material-production assets to CannaVEST. PhytoSPHERE maintains its access to hemp-based raw materials by entering into a supply agreement whereby CannaVEST will supply it with such ingredients at "high CBD concentrate hemp oil" needed to develop, manufacture, and market its products.

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  • Report this Comment On March 02, 2013, at 3:25 PM, drsteven51 wrote:

    MJNA stock is poised to skyrocket for this reason and many others. Now is the time to BUY and HOLD this stock. The market is HUGE for both HEMP and cannabis products.

  • Report this Comment On August 04, 2013, at 3:34 PM, kilurtv wrote:

    If you have cash ...load up on this stock. At this price buy 100,000 shares...sit back and relax...

    also buy any cannabis related stock...all tobacco companies are waiting for it to become LEGAL

  • Report this Comment On August 04, 2013, at 3:34 PM, kilurtv wrote:

    good deal...

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