New York-based communications consultancy 5WPR has removed Creative Edge Nutrition, a Michigan-based firm seeking a licence to produce medical marijuana, from its client list.
According to Canadian newspaper the Globe and Mail, the falling-out happened after Creative Edge issued press releases under 5WPR’s name ‘without its knowledge or approval.’ The first controversial press release featured a discussion between a shareholder and Creative Edge’s ‘internal public relations’. A second one announced the appointment of a new CEO for the firm. Both releases were reissued 10 days later, with 5WPR’s name removed.
The newspaper had earlier revealed there were ‘mounting concerns’ over Creative Edge’s recent conduct, with former CEO Bill Chaaban allegedly netting $4.6 mn from the massive sale of his stock in the past year. It was also reported that Creative Edge, which operates a Canadian branch called CEN Biotech, had given out premature, ‘misleading’ information about its ongoing application with Health Canada to open ‘the world’s largest’ marijuana plant in Lakeshore, Ontario.
Denying these allegations in a press release, the firm also stated it could not comment further or accept a formal interview as it was under the quiet period restrictions normally required for SEC-reporting companies, even though Creative Edge trades on the OTC market. Its share price has fallen sharply since the Globe’s article, bringing its market capitalization down to $42 mn from its $350 mn peak.
Creative Edge is one of many examples of marijuana-focused penny stocks that reached spectacular heights despite having no proper revenue. Companies such as Tweed Marijuana and OrganiGram, which were granted one of the 15 Canadian licenses to produce medical marijuana, saw their stock price skyrocket after listing last year. Both companies’ shares slowly declined over the following months.
The ‘pot stock’ frenzy in North America seems unlikely to fade, however, with Canadian mining exploration companies, frustrated by tepid investor interest, reportedly rapidly transitioning into marijuana businesses.
