Cannabis Science Inc (OTCMKTS:CBIS) is a penny player that has been included in the concept of “cannabis-related stock” even though the company doesn’t have any cannabis-related revenues and in fact doesn’t appear to be on a path toward generating any at any point in the foreseeable future. It’s a rather remarkable arrangement that we have been trying to explain to folks for the past 10 months.

In our last piece, titled, “One Wrong Turn After Another for Cannabis Science Inc (OTCMKTS:CBIS)”, we said, “As such, at the end of the day, this remains a strictly off-limits name in our eyes.” We have recommended either staying away or even getting short. Since we wrote our “Cannabis Science Inc (OTCMKTS:CBIS) Isn’t Sending the Best Signals” piece back in April, the stock has lost 53% of its market cap (about $96M) during the biggest boom period ever in the history of the cannabis sector.

Cannabis Science Inc (OTCMKTS:CBIS) is a company that has been actively striving for, and achieving a bump in legitimacy through some of its newly established relationships. However, the concept of sales still seems far off, which is a bit remarkable.

CBIS defines itself according to the narrative of a leading-edge researcher and designer of cannabinoid solutions to health problems.

CBIS is involved in developing medicines for autism, blood pressure, cancer and cancer side effects, as well as for other illnesses comprising for general health maintenance. It also develops CS-TATI-1 for newly diagnosed and treatment-experienced patients with drug-resistant HIV strains, as well as those intolerant of available therapies; CS-S/BCC-1 to treat basal and squamous cell carcinomas; and a proprietary cannabis-based therapy for neurological conditions.

In addition, CBIS offers an online video-based medical cannabis education system, including courses, such as medical cannabis law, medical marijuana, cooking, horticulture, and bud tending; and manufactures and distributes specialty horse and pet grooming and topical applications. It has a license agreement with Apothecary Genetics Investments LLC to produce various brand formulations for California medical cannabis market.

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As noted above, we have been very bearish on CBIS primarily for three reasons: First, the company never seems to be getting any closer to actual revenues despite many years of constant hype-laden press releases; second, the company has an unquestionable history of constant dilution of its shareholders; and third, the financials remain terrible (one huge net loss after another, tons of debt against very little cash, and an unwillingness to move to audited filings for operations), which is an enormous risk given the second reason.

The technicals in recent action have strongly vindicated our position on this stock – and it’s important to note that we are not bearish on many stocks, and there are plenty of stocks on the OTC and in the cannabis patch that we have been quite bullish on. CBIS just broke recent support in dramatic fashion, diving in a waterfall decline over recent days when the $0.04 level finally gave way after two months of desperate supportive attempts.

CBIS just broke recent support in dramatic fashion, diving in a waterfall decline over recent days when the $0.04 level finally gave way after two months of desperate supportive attempts.

Naturally, a dead cat bounce is possible at any time, especially when a stock has been so pervasively trounced as this one, and when the financials are in this type of shape (ie, short interest might be a bit overbuilt at the moment). Hence, one has to expect at least a temporary reprieve before long. But we would imagine such a move would simply present investors with a chance to sell, rather a real inflection in the trend.

Currently trading at a market capitalization of $86.2M, CBIS has a store ($322K) of cash on the books, which must be weighed relative to about $2.3M in total current liabilities. One should also note that debt has been growing over recent quarters. CBIS claims to have some nominal revenues, but we are talking about a few hundred bucks here and there, which is tantamount to nothing, and even that small number is falling. As we have contended: there are plenty of interesting small and micro-cap companies that offer growth as well as exposure to the exciting cannabis patch. This is one to hold up as an example by contrast in almost every respect. Sign-up for continuing coverage on shares of $CBIS stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CBIS, either long or short, and we have not been compensated for this article.