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The “King of Cannabis” just sent Stemcell United Ltd shares 3,000% higher

If you want to set your company’s share price flying higher on the ASX at the moment it seems the best method is to announce that you are planning a move into the medical cannabis market.

This afternoon the Stemcell United Ltd (ASX: SCU) share price climbed a breezy 2,978% to hit 40 cents and a market value of around $146 million just because it had appointed the industry-acclaimed “King of Cannabis” Nevil Schoenmakers as a strategic adviser.

Prior to today Stemcell United was involved in the traditional Chinese medicine plant extract business, although it didn’t actually generate any sales revenues in the six-month period ending December 31 2016, which probably explains why it was valued at just $3 million prior to today’s incredible share price rise.

Today around $360,000 worth of shares changed hands in Stemcell United just over investor excitement about the company’s vague plans to “pursue opportunities in the medical cannabis sector”.

Other medical cannabis companies like MMJ Phytotech Ltd (ASX: MMJ), Zelda Therapeutics Ltd (ASX: ZLD), Auscann Group Holdings Ltd (ASX: AC8) and Creso Pharma Ltd (ASX: CPH) have all enjoyed surging share prices partly on the back of a March 8 announcement by Health Minister Greg Hunt.

In the announcement the minister stated that the first license to grow and harvest medical cannabis market had been issued, with supply from the license granted for the Victorian medicinal marijuana market. Unfortunately for share market punters it was a private company named ‘Cannoperations’ that won the government award.

The minister did also note: “Other licences for other Australian jurisdictions are expected to be issued shortly”. If any listed entities are awarded licences their share prices are likely to go gangbusters as speculators, momentum, and day traders pile into the stocks hoping to make a quick profit.

As an investor I’m not a speculator on pot stocks and think some of the high valuations of these companies may have a long way to fall over time.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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