The manufacturer of a marijuana-dispensing machine saw their stock price shoot up by 3,000 percent this week thanks in part to a mention in MarketWatch.
In his article, "How to invest in legalized marijuana," Quentin Fottrell noted on Tuesday that the medical-marijuana industry was already worth about $1.7 billion and was growing fast thanks to legalization efforts. Investing in companies that manufactured marijuana growing equipment, rather than actually growing or selling marijuana, seemed like the best way to make money off the drug, he explained.
MedBox saw its stock price rise from about $4 on Monday to $215 on Thursday. MedBox, the creator of an automated marijuana dispensing system, was mentioned in the article along with some other marijuana-related businesses.
“We believe an appropriate trading range is between $5 and $10 but, alas, the market will do what it will do,” Medbox founder Vincent Mehdizadeh told MarketWatch.
In a statement released Friday, the company said the stock prices were not based upon present business economics and sought to temper investor expectations.
"We will take steps to attempt to avoid a roller-coaster syndrome, with the stock rising and falling in dramatic fashion," Mehdizadeh stated. "We are in discussions with our attorneys to determine if we can reward our early investors who believe in our company, by giving them company-owned shares should the price they bought at fall significantly."
On Friday, the stock price fell to about $100, according to Market Watch.
Investing in marijuana-related businesses is a risky venture. Though Colorado and Washington state have legalized recreational use of the drug, and eighteen states have legalized the medical use of marijuana, it is still prohibited at the federal level. Hundreds of marijuana dispensaries have been shut down by federal agents.
[Medical marijuana image via Shutterstock]