President of Lithium Company Cypress Development (TSX-V: $CYP) (OTCBB: $CYDVF) updates shareholders and Discusses Critical Lithium Investment Drivers

President of Lithium Company Cypress Development (TSX-V: $CYP) (OTCBB: $CYDVF) updates shareholders and Discusses Critical Lithium Investment Drivers

Vancouver, BC – March 8, 2017 (Investorideas.com Newswire) Cypress Development Corp. (TSX-V: CYP) (OTCBB: CYDVF) (Frankfurt: C1Z1) (“Cypress” or the “Company”) a lithium and zinc exploration company developing projects in Nevada, U.S.A., today released a Letter to Shareholders by President Don Huston.

Read this release in full at http://www.investorideas.com/news/2017/mining/03081CYP.asp

My Fellow Shareholders and Investors:

Cypress is confident that the need, growth and current limited supply for lithium will continue and expand for several years to come.

I would like to start my comments with an analogy to address the viability and importance of Lithium, which is a small but critical component in the development and growth of electronics as well as various forms of the Lithium battery sector.

A Tesla S, while arguably more a work of art than a utilitarian vehicle, represents no more than an expensive (and very good looking) paperweight without a critical couple of pounds of Lithium.

From our informative piece; Lithium Primer: The Critical 7% Solution:

Many months of work has brought Cypress closer to the establishment of a potential resource estimate containing some of the highest-grade Lithium available. I will also speak to our announced drilling plans, the uniqueness and value of our work with synthetic brine and our major goals for 2017 and beyond.

Critical Lithium Investment Drivers

With apologies to Goldman Sachs, Lithium is not ‘the new gasoline’. It is however, critical to battery power storage technology and is agnostic as to the feed source; solar, wind, water etc.

·        Lithium is abundant in hard rock, brine and clay deposits. Ironically, there are very few accessible economically viable deposits.

·        Demand will outstrip supply

·        Traditional global fossil fuel establishment are buying battery assets

·        Lithium production dominated by 3 global companies. 2016 production was quickly sold out

·        As carmakers increase demand for batteries there's going to need to be more gigafactories built. Just to supply auto demand you need 200 gigafactories. (Elon Musk 2014)

·        Lithium component years ahead of any competing metal.

·        Annual lithium market will grow 259% by 2025, representing a compound annual growth rate of 14% across all demand sectors. Lithium-ion battery-based electric vehicles will be key driver of this demand.

For Cypress, 2016 was about organization, relationships, sample testing to delineate grades and prepare for a now announced drill program.

We also closed several financings ensuring available funds for both administration and drilling plans and execution.

2016 primarily moved Cypress forward to achieving its goal of becoming a meaningful producer of this component. Growth in electronic needs as well as batteries that power automobile, residential homes and industrial applications is extremely compelling.

If you liked (or didn’t like) 2016….

The results of the fifty deionized water leach assays (analyzed by ALS Chemex lab in Reno) show strong extraction of lithium with low extraction of magnesium and calcium.  The water and soluble element “synthetic brine” produced for assay from the samples has very similar chemistry to that of reported chemistry of production brines from the Clayton Valley and to brines reported by Pure Energy Minerals within their northern resource area.

2017 will be an exceptional year for Cypress and our shareholders as we work to prove up tonnage and the economics of Clayton Valley.

Before I speak about our announced extensive drilling plans, investors will be extremely interested in a brief discussion of ‘synthetic brine’.

Robert Marvin, PGeo, Exploration Manager for Cypress Development Corp., recently produced a focused article on the Company’s compelling work producing Synthetic Lithium Brine  through process ME-MS03 at our Clayton Valley Project in Nevada.

“The results of the fifty deionized water leach assays show exactly that, strong extraction of lithium with very low extraction of magnesium and calcium,” states Marvin. “The water and soluble element “synthetic brine” produced for assay from the samples has very similar chemistry to that of reported chemistry of production brines from the Clayton Valley and to brines reported by Pure Energy Minerals within their northern resource area.”

While you are encouraged read the technical in Bob’s report, the bottom line is this:

Synthetic brine (process ME-MS03) produces significant amounts of lithium and sodium and very low amounts of the undesirable by products as produced by the more toxic 4-acid process (ME-ICP61).

Lithium		Magnesium		Calcium		Potassium		Sodium
ME-ICP61	ME-MS03	ME-ICP61	ME-MS03	ME-ICP61	ME-MS03	ME-ICP61	ME-MS03	ME-ICP61	ME-MS03
	Li	Mg	Mg	Ca	Ca	K	K	Na	Na
0.12%	0.05%	2.12%	0.14%	4.87%	0.11%	4.54%	0.29%	3.59%	2.90%

The more benign (less toxic and more cost-effective) water leach solution produced from Dean claystone is more than double the content of lithium than that of the Pure Energy brine and is four times that of the Albemarle production brine.

While Bob goes into more detail, the thrust for us and value to shareholders is that the process vastly increases the viability of lithium sourced claystone which to date has been a concern to production of brine and is comparable and sometime superior to natural brines.

And put simply, that means more lithium, extracted cheaper and greener. This process is a major step forward in unlocking lithium from claystone; a process that was previously though too difficult, toxic and expensive.

Ratio	Dean Claystone	CV-1 (@700 feet)	Well 392
Mg/Li	2.98	2.27	2.58
Ca/Li	2.34	4.09	3.25
K/Li	6.17	17.94	18.33
Na/Li	61.70	202.94	208.33
	Cypress	Pure Energy	Albemarle

Let the Drilling Begin.

Our work to date has shown exceptional lithium grades in our Dean Project located east of Albermarle’s Silver Peak mine, Glory Project located to the immediate south and Advantage Lithium’s/Nevada Sunrise's project located to the immediate north.

Now the time has arrived to commence the proving up of tonnage, viability and economics of the area.

The U.S. Bureau of Land Management recently approved 12 exploration drill hole locations into the Dean Frontera Verde Zone. We plan to drill the 12 vertical holes using NQ diamond drill core being approximately 2-inch diameter core.

Morningstar Drilling of Three Forks, Montana will complete the drilling. Drilling is expected to begin on or about March 1, 2017.

Our program, now underway, is intended to measure the depth/ thickness, from surface, of the known high grade lithium bearing claystone on our 2700-acre Dean Project.

Extensive sampling by Cypress at the Dean Project has identified strong lithium mineralization up to 3,700 ppm lithium (1.98% lithium carbonate equivalent) in a highly soluble uplifted lakebed mudstone and claystone in the 2-square kilometer Frontera Verde Zone that averages 1,500 ppm lithium (0.80% lithium carbonate equivalent) at surface.

In conclusion, from our February 14^th press release:

“Assays from surface sampling at the Dean Project have returned extremely encouraging results in the form of widespread high lithium mineralization hosted within highly reactive and soluble rock units.

We have now completed detailed analysis of the results of several different assay methods as a first order study of  potential extraction methods of the lithium from the host rock sequence. This study highlights the similarity of the solutions made from dissolving the surface claystone in a weak aqua regia solution and deionized water compared to production brines of the basin.

The results of the study strongly indicate that recovery of lithium from a solution from the outcropping evaporates and water could potentially be done by methods currently being used in the Clayton Valley and by new methods under development by Pure Energy Minerals and others.”

Cypress’ mandate is to systematically explore its properties for a world-class lithium-brine resource as well as expand exploration relating to the potential for a lithium resource that exists within the large area of non-hectorite “claystones,” which have shown recent high grade lithium assay recoveries from these same resources.

I look forward to an exciting and watershed year for our Company and know that we work every day to add consistent and meaningful shareholder value.

Your support is very much appreciated and we welcome your comments and ideas.

Sincerely,

Don Huston

CEO
Cypress Development Corp.

About Cypress Development Corp.

Cypress development Corp is a publicly traded lithium and zinc exploration company that continues to acquire and develop potentially viable mineral projects in the State of Nevada, U.S.A.

Cypress is very active in Clayton Valley, Nevada with its team committed to systematically exploring its properties for both a lithium-brine resource and expanding exploration relating to the potential for a lithium resource that exists within the large area of non-hectorite “claystones” discovered at surface that has seen recent high lithium assays recovered from these same “claystones”.

Cypress Development Corp. has approx. 34 million shares issued and outstanding.

To find out more about Cypress Development Corp. (TSX-V: CYP), visit our website at www.cypressdevelopmentcorp.com.

CYPRESS DEVELOPMENT CORP.

“Don Huston”
                                                           
DONALD C. HUSTON
President

For further information contact myself or:
Don Myers
Director
Cypress Development Corp.
Telephone: 604-687-3376
Toll Free: 800-567-8181
Facsimile: 604-687-3119
Email: info@cypressdevelopmentcorp.com

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE.

This release includes certain statements that may be deemed to be "forward-looking statements". All statements in this release, other than statements of historical facts, that address events or developments that management of the Company expects, are forward-looking statements. Although management believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements. The Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause actual results to differ materially from those in forward-looking statements, include market prices, exploration and development successes, continued availability of capital and financing, and general economic, market or business conditions. Please see the public filings of the Company at www.sedar.com for further information.

Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp Disclosure this news is a paid for news on Investorideas.com – learn more about publishing your news on our site http://www.investorideas.com/News-Upload/

Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.

Drone Stock Directory Update; Commercial Drone Market to exceed $2B by 2023

Drone Stock Directory Update; Commercial Drone Market to exceed $2B by 2023

Investorideas.com – March 7, 2017 – www.Investorideas.com, a global news source covering leading sectors including tech stocks issues the updated preview of the directory of publicly traded drone stocks within the sector.

According to a report "Unmanned Aerial Vehicles (UAV)/Commercial Drone Market Size By Product (Rotary Blade, Fixed Wing, Nano Drone, Hybrid), By Application (Government, Media & Entertainment, Agriculture, Energy), Industry Outlook Report, Regional Analysis, Application Development, Price Trends, Competitive Market Share & Forecast, 2016 – 2023" by Global Market Insights, the UAV/Commercial Drone Market size is forecast to be valued at USD 2.05 billion by 2023.

Growing need for law enforcement activities is anticipated to drive industry demand from 2016 to 2023.* http://www.openpr.com/news/460163/Commercial-Drone-Market-to-exceed-2bn-by-2023.html

Recently added this week is a TSX listed drone company. Alta Vista Ventures Ltd. (CSE:UAV) is the frontrunner in the Unmanned Aerial Vehicle (UAV) industry. In Spanish, Alta Vista translates to "High View". Alta Vista is entering the Unmanned Aerial Vehicle (UAV) sector by consolidating a diverse group of established, profitable UAV companies to create a leading service provider.

Investorideas.com nanotechnology stock directory includes companies on the TSX, OTC, NYSE, NASDAQ and global stock exchanges.

Read this news in full at http://www.investorideas.com/news/2017/drone/03071StockDirectory.asp

DRONE Stocks

For the full tech stock directory go here

http://www.investorideas.com/TSS/stock_list.asp

AeroVironment, Inc. (NasdaqGS:AVAV) is a technology solutions provider that designs, develops, produces and supports an advanced portfolio of Unmanned Aircraft Systems (UAS) and electric transportation solutions.  Agencies of the U.S. Department of Defense and allied military services use the company’s electric-powered, hand-launched unmanned aircraft systems extensively to provide situational awareness to tactical operating units through real-time, airborne reconnaissance, surveillance and communication. AeroVironment’s electric transportation solutions include a comprehensive suite of electric vehicle (EV) charging systems, installation and network services for consumers, automakers, utilities and government agencies, power cycling and test systems for EV developers and industrial electric vehicle charging systems for commercial fleets.

Alta Vista Ventures Ltd. (CSE:UAV)  is the frontrunner in the Unmanned Aerial Vehicle (UAV) industry. In Spanish, Alta Vista translates to "High View". Alta Vista is entering the Unmanned Aerial Vehicle (UAV) sector by consolidating a diverse group of established, profitable UAV companies to create a leading service provider.

Amazon.com, Inc. (NasdaqGS: AMZN) is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. DRONES:  Amazon Prime Air is a future delivery system that will get packages to customers in 30 minutes or less using small unmanned aerial vehicles. With Prime Air, we're developing a system that is safe, environmentally sound and enhances the services we already provide to millions of customers. Amazon will use Prime Air to deliver packages that weigh up to five pounds, which makes up nearly 90% of the items it sells. There are Prime Air development centers in the United States, the United Kingdom and Israel, and the team is testing in multiple international locations.

Prime Air vehicles are being designed for a range of 10 miles or more.

Ambarella, Inc. (NasdaqGS:AMBA) is a leading developer of low-power, high-definition and Ultra HD video compression and image processing solutions. The company's products are used in a variety of cameras including security IP-cameras, sports cameras, wearable cameras and automotive video camera recorders. Ambarella compression chips are also used in broadcasting TV programs worldwide. DRONES: Ambarella is at the forefront of a new generation of high-performance HD and Ultra-HD sports and flying cameras designed for the outdoor enthusiast.  These action cameras are expected to have small form factors and long battery lives, without sacrificing the advanced features that make vivid, clean video and professional-quality still images a reality.  Whether mounted on a quadcopter or worn while skiing, these devices are required to perform complex image stabilization functions, adapt to ever-changing lighting environments and communicate wirelessly with smartphones on-the-fly.  Ambarella addresses the demanding requirements of the sports and flying camera market by offering products that combine exquisite video and image quality, low power consumption, and best-in-class compression efficiency.

Boeing Co (NYSE: BA) is the world's largest aerospace company and the leading manufacturer of commercial jetliners and military aircraft combined. Additionally, Boeing designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. As a major service provider to NASA, Boeing is the prime contractor for the International Space Station. The company also provides numerous military and commercial airline support services. Boeing provides products and support services to customers in 150 countries and is one of the largest U.S. exporters in terms of sales. Boeing has a long tradition of aerospace leadership and innovation. We continue to expand our product line and services to meet emerging customer needs. Our broad range of capabilities includes creating new, more efficient members of our commercial airplane family; integrating military platforms, defense systems and the warfighter through network-centric operations; creating advanced technology solutions that reach across business units; e-enabling airplanes and providing connectivity on moving platforms; and arranging financing solutions for our customers. DRONES: Boeing and The Insitu Group have developed and built a low-cost, long-endurance autonomous unmanned vehicle, called ScanEagle. ScanEagle is based on Insitu's Seascan miniature robotic aircraft and draws on Boeing's systems integration, communications and payload technologies. The Unmanned Little Bird Demonstrator is a modified MD 530F single-turbine helicopter designed for optionally manned flight. It won the AHS 2005 Grover E. Bell award for the best advancement in rotorcraft research that year. The platform is capable of dual pilot, single pilot or no pilot flight operations. It can be remotely operated or programmed for autonomous operations in any of these operational modes.

Drone Aviation Holding Corp. (OTC: DRNE) provides critical aerial and land based surveillance and communications solutions to government and commercial customers. Utilizing a unique tethering capability, drone systems operate in the National Airspace within FAA guidelines for safe operations. Drone systems are designed and developed in-house utilizing proprietary technologies and processes that result in compact, rapidly deployable aerostat solutions and mast based systems to fulfill critical requirements by the military and law enforcement in the U.S. and to our allies around the world.

Drone USA, Inc. (OTC:DRUS) is an Unmanned Aerial Vehicles (“UAV”) and related services and technologies company that is engaged in the research, design, development, testing, manufacturing, distribution, exportation and integration of advanced low altitude UAV systems, services and products. The Company also provides procurement, distribution and logistics services through its subsidiary, Howco Distributing Co., to the United States’ Department of Defense and Defense Logistics Agency. Drone USA has operations based in New York NY, Vancouver, Washington and is expecting to open a research, development and manufacturing facility in San Luis Obispo, California in early 2017. Drone USA’s target markets include select domestic and international government, public safety and commercial segments such as agriculture, photogrammetry, mining, utilities, and entertainment. The Company continues to seek strategic acquisitions and partnerships with UAV related firms that offer superior technologies in high-growth markets, as well as acquisitions and partnerships with firms that have complementary technologies and infrastructure.

Facebook (NasdaqGS:FB) operates as a social networking company worldwide. The company builds tools that enable users to connect, share, discover, and communicate with each other; enables developers to build social applications on Facebook or to integrate their Websites with Facebook; and offers products that enable advertisers and marketers to engage with its users. DRONES: Ascenta - Announcing the Connectivity Lab at Facebook, a team that is working on new aerospace and communication technologies to advance the Internet.org mission of improving and extending internet access. The Lab, which includes some of the world’s top experts from Ascenta, NASA’s Jet Propulsion Laboratory, NASA’s Ames Research Center, and the National Optical Astronomy Observatory, is already working on new delivery platforms including planes and satellites to provide connectivity. The Connectivity Lab at Facebook is developing ways to make affordable internet access possible in communities around the world. The team is exploring a variety of technologies, including high-altitude long-endurance planes, satellites and lasers.

Google Inc. (NasdaqGS:GOOGL) is a global technology company. The Company’s business is primarily focused around key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. In April 2014, Google Inc acquired Titan Aerospace, a Moriarty-based manufacturer of solar-powered drones. Google / Titan Aerospace is a manufacturer of solar-powered Unmanned Aerial Vehicles (UAV). The Company operates a research and development facility located in Moriarty, New Mexico, where it is working with the FAA to obtain airspace for flight testing within the National Airspace System and Special Airworthiness Certification for its Solara aircraft.

GoPro, Inc. (NasdaqGS:GPRO) is transforming the way people capture and share their lives. What began as an idea to help athletes self-document themselves engaged in sport, GoPro has become an end-to-end storytelling solution that helps the world share itself through immersive and engaging content. DRONES: Karma Drone

InvenSense, Inc. (NYSE:INVN) is the world`s leading provider of intelligent sensor system on chip (SoC) for Motion and Sound in consumer electronic devices. The company`s patented InvenSense Fabrication Platform and MotionFusion® technology address the emerging needs of many mass-market consumer applications via improved performance, accuracy, and intuitive motion-, gesture- and sound-based interfaces. InvenSense technology can be found in Mobile, Wearables, Smart Home, Industrial, and Automotive products. InvenSense is headquartered in San Jose, California and has offices in Boston, China, Taiwan, Korea, Japan, France, Canada, Slovakia and Italy. DRONES: The MPU-3300 offers industry best performance in harsh industrial environments where extreme temperature ranges, and severe shocks are present. Applications that can be addressed with the MPU-3300 include Attitude Heading Reference Systems (AHRS) for Aerospace and Robotics; Navigation Systems for Industrial Vehicles, Aircraft, and Ships; Platform and Antenna Stabilization, Precision Robotics, Inventory Control Systems, Survey Instruments, Factory Equipment, Industrial Power Tools, Unmanned Aerial Vehicles, Precision Agriculture Machinery, Guidance and Steering Applications, and Construction Equipment.

Kratos Defense & Security Solutions, Inc. (NasdaqGS:KTOS) is a mid-tier government contractor at the forefront of the Department of Defense’s Third Offset Strategy. Kratos is a leading technology, intellectual property and proprietary product and solution company focused on the United States and its allies’ national security. Kratos is the industry leader in high performance unmanned aerial drone target systems used to test weapon systems and to train the warfighter, and is a provider of high performance unmanned combat aerial systems for force multiplication and amplification. Kratos is also an industry leader in satellite communications, microwave electronics, cyber security/warfare, missile defense and combat systems. Kratos has primarily an engineering and technically oriented work force of approximately 2,800. Substantially all of Kratos' work is performed on a military base, in a secure facility or at a critical infrastructure location. Kratos' primary end customers are National Security related agencies.

Lockheed Martin Corp. (NYSE: LMT) Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 113,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. DRONES: The K-MAX unmanned cargo helicopter keeps forward operating bases supplied, reducing the number of truck convoys – and the troops that protect them – on the dangers roads of Afghanistan. Unmanned aerial systems like Desert Hawk III enables soldiers to see what’s over the next hill, while persistent surveillance platforms like PTDS, High Altitude Airship, Hybrid Air Vehicle and ISIS can keep eyes in the sky over vast areas for weeks, months and even years at a time.

Northrop Grumman Corporation (NYSE: NOC) is a leading global security company providing innovative systems, products and solutions in unmanned systems, cybersecurity, C4ISR, and logistics and modernization to government and commercial customers worldwide. Unmanned Air Systems/Drones

Textron Inc. (NYSE: TXT) is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee and Textron Systems. DRONES: Textron Systems’ businesses develop and integrate products, services and support for aerospace and defense customers, as well as civil and commercial customers including those in law enforcement, security, border patrol and critical infrastructure protection around the globe. Harnessing agility and a broad base of expertise, Textron Systems’ innovative businesses design, manufacture, field and support comprehensive solutions that expand customer capabilities and deliver value. Textron Systems consists of its Advanced Information Solutions, Electronic Systems, Geospatial Solutions, Lycoming Engines, Marine & Land Systems, Support Solutions, TRU Simulation + Training, Unmanned Systems and Weapon & Sensor Systems businesses.

Valmie Resources Inc. (OTC:VMRI) as established to bring unmanned system software, hardware and cloud solutions to a range of industries around the globe. Valmie’s mission is to become one of the world’s leading sources of unmanned systems and related high tech equipment and services. Valmie holds a 333 Exemption to operate unmanned aircraft within the U.S. National Airspace System and is authorized to conduct commercial operations. In addition, Valmie has teamed up with two leading edge tech companies, Vertitek and Aerolift eXpress, to offer businesses exceptional unmanned aerial services worldwide. Valmie understands the critical role unmanned systems will play in the coming years, guarding countries, protecting life, providing valuable information and recording everything from sporting events to wildlife migration. Valmie is proud to be involved in this exciting industry that has so much to offer and holds the potential to impact and improve the lives of so many people.

For the full tech stock directory go here http://www.investorideas.com/TSS/stock_list.asp

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Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894.  Global investors must adhere to regulations of each country.

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#Cannabis #Investor and Expert Alan Brochstein, CFA, Talks about the Evolution of the Sector; the Risks and Opportunities

Cannabis Investor and Expert Alan Brochstein, CFA, Talks about the Evolution of the Sector; the Risks and Opportunities

“I believe that there was a landmark revelation in Spicer's comments that people may be overlooking” - Alan Brochstein, CFA

Point Roberts, WA, Delta, BC – March 6­, 2017 – Investorideas.com, a global news source and investor resource covering actively traded sectors including cannabis and hemp stocks features an exclusive interview with Alan Brochstein, CFA. Alan is a well-known expert in the sector and founded 420 Investor, a subscription-based due diligence platform for investors interested in publicly-traded cannabis stocks.

Alan talks about the evolution of the sector and some of the short and long term risks and opportunities.

Read the interview in full at http://www.investorideas.com/news/2017/marijuana/03061Evolution.asp

Alan Brochstein, CFA

Interview  

Q: Investorideas.com

Alan can you share your background and what drew you to the cannabis sector?

A: Alan Brochstein, CFA

My entire thirty-year career has been in the investment industry, with most of it in equity analysis and portfolio management. In 2013, when I was running an independent equity research and consulting practice and working with a handful of institutional money managers, I stumbled upon the publicly-traded cannabis stocks and was surprised on a number of fronts. First, just the fact that there were publicly-traded stocks was quite a shock. Second, it didn't seem as if investment professionals were aware. Third, and most importantly, I was disappointed when I looked at these few stocks to see such terrible fundamentals, high valuations and poor corporate governance practices. Quite simply, these companies didn't really reflect the industry. As a teenager who was very involved with the Libertarian Party back in the 80s, cannabis legalization was a big issue for me, but I had really not been paying attention for over twenty years to the progress that was being made. Over the balance of 2013, I devoted a great deal of time to catching up and learning about the social justice, economic, civil liberties and health issues surrounding cannabis legalization.

Q: Investorideas.com

How would you break down the past few years in terms of the evolution of the sector and in particular, the impact of the last election in terms of legalization in several new states?

A: Alan Brochstein, CFA

The sector has evolved slowly. I joke that I goofed when I named my service "420 Investor" and should have called it "420 Trader". I track about 450 companies in North America, a number that keeps growing. Most of these companies are either stock selling schemes or just not likely to succeed.  The tremendous recent progress of the industry is a two-sided sword, as on the one hand, it represents a fundamental opportunity that attracts investors. At the same time, it also attracts opportunists looking to prey on that investor interest. Hence, the market has been one more appropriate for traders of penny stocks rather than investors.

The legalization of Colorado set off a tremendous bull market in the few stocks that were in existence then (back in early 2014), even if the companies weren't ever going to benefit from what was going on in Colorado. Both the Colorado and Washington implementations went reasonably well. While the industry continued to expand, adding Oregon and Alaska to the states that had fully legalized as well as dramatically expanding the number of state-legal medical cannabis programs, the stocks suffered for two years following that early 2014 move where the typical stock went up over 600% in fewer than three months. The recent elections, which doubled the number of "recreational" states, including the addition of California and Massachusetts especially but also Maine and Nevada, brought a lot of interest to the sector, which recently posted levels not seen since early 2015, as measured by the 420 Investor Cannabis Stock Index. Unfortunately, we are seeing some of the same opportunism among penny stock promoters and newsletters that we saw back in 2014, but at the same time, we are seeing some new entrants in the sector that better reflect the industry in terms of having sales, for example.

We have reached an inflection point, in my view. Recently, two companies announced that they will soon offer Exchange-Traded Funds (ETFs) for the cannabis sector, and there is also a mutual fund. While I find these investment vehicles to have fatal flaws, it shows that there is demand.

Yes, there remains way too much noise in the sector, but I recently launched my fourth model portfolio that reflects my view that investors now have options for long-term investing. My "420 Quality" model portfolio will include these names and is not going to be trading-oriented.

Q: Investorideas.com

When you look at the Canadian market and the publicly traded stocks and the US stocks and market, what are some of the biggest differences in terms of risk and opportunity in each?

A: Alan Brochstein, CFA

The Canadian market has been a big focus of mine. Having a federally legal medical program that will in all likelihood permit sales to all adults beginning in 2018 is a substantial difference from the United States, which is federally illegal. This matters in terms of scaling the businesses as well as raising capital. Since Justin Trudeau was elected in late 2015, the publicly-traded licensed producers in Canada have raised over C$700M, and this excludes subsequent warrant exercises as well as capital raised by private companies. Publicly-traded U.S.

companies struggle to raise capital. Even NYSE-listed REIT Innovative Industrial Properties (IIPR), one of the few stocks that doesn't trade on the OTC, wasn't successful in its IPO, dramatically reducing the size of the offering. Another opportunity for the Canadian companies is their ability to extend their intellectual property and capital into other markets. Germany, for instance, allows imports and will be implementing its federally legal medical cannabis system for local production by 2019, a development that is favorable for a few Canadian companies that are already in that market. Similarly, other parts of the world, including Australia and South America, provide opportunity for the Canadian LPs. The risks in Canada, in my view, are primarily potential delays in legalization as well as the valuation of the stocks.

Q: Investorideas.com

Based on surveys and voting, the American public wants to see marijuana legalized, yet headlines in the last week have investors very nervous following White House Press Secretary Sean Spicer saying during a White House briefing on Feb. 23 that he predicts “greater enforcement” of federal marijuana laws. Where do you see the two contradictory realities meeting over the short term and long term?

A: Alan Brochstein, CFA

I believe that there was a landmark revelation in Spicer's comments that people may be overlooking, as the government is publicly supporting medical cannabis. At the same time, it talks about "recreational" cannabis as being potentially problematic. I believe that these comments about greater enforcement refer to two distinct areas. First, the federal government may play a more active role in determining the ground-rules. The Cole Memo laid out 8 rules that, if followed, would prevent federal interference in states with legal cannabis, and these may be made a bit tougher perhaps. One of those rules, avoiding diversion, is likely the source of concern for the Trump Administration, as there has been litigation from non-legal states against Colorado for not taking effective steps to prevent diversion to their states. This is a serious concern, as commercial organizations are clearly violating federal law by transporting cannabis products outside of Colorado. So, it's actually in the best interests of the cannabis industry for the federal government to step up enforcement in this area. So, more regulations and a more active federal role may be what lies ahead. At the same time, both former President Obama and Attorney General Jeff Sessions have suggested that the current laws need to be changed by Congress, which has acted like an ostrich with its head in the sand over the past few years. I don't expect full legalization at the federal level for quite some time, but there are several steps Congress can take that would help clarify what is permitted under state-legal cannabis and what isn't. Big areas of concern have been banking and medical research.

Can federally regulated banks work with state-legal businesses? Can state institutions who take federal money conduct medical cannabis research? The laws aren't clear, and the uncertainty has stymied the industry.

Q: Investorideas.com

Also on that note, there was a big sell-off on some of the stocks, some dropping up to 15% on the Spicer comment. Do you see that as a buying opportunity for the right stocks?

A: Alan Brochstein, CFA

Without doubt, there is substantial uncertainty and potential risk to cannabis companies post-November. Cannabis remains federally illegal, and the hands-off enforcement policy since 2013 (Cole Memo) may be ending. With that said, the higher quality companies in the sector have pulled back rather dramatically since early November. While the Trump Administration is taking a potentially different approach to "recreational" cannabis than medical cannabis, which it has endorsed, I don't expect major changes ahead. The states that have implemented will not go back, in my view, though we could see not only some changes to how the federal government deals with state-legal cannabis from a regulatory perspective as well as some delays in implementing in the new states to legalize, which includes California, Maine, Massachusetts and Nevada. With that said, I believe that Congress may finally move over the next few years to address some issues like banking and research.

Q: Investorideas.com

Separate from the growers and retailers, where do you see opportunity in the service providers in the sector and where do you see the biggest untapped potential?

A: Alan Brochstein, CFA

I am always looking for companies that provide technology to help achieve two goals: Lowering the cost of production and improving compliance. While I expect that there will always be a craft cannabis angle that some companies will play, and of course building brands will pay off for many, the production of flower will continue to commoditize over time. We have seen tremendous price pressure in Colorado and Washington just a few years after implementation of legal production for adult use. So, companies that can help growers lower their costs merit attention. Cutting labor and energy costs are big opportunities.

Similarly, many companies will struggle to remain compliant with regulations, which is essential in a legal, regulated market. Another area where I see opportunity is broadly in standardization and consistency of outcomes. The big criticism of cannabis, which is a very complex plant, is that the user experience varies too greatly. I think that those companies that are able to create solutions to this problem will win big. I also think those companies that can create health and wellness solutions as opposed to just marketing big doses of THC, will be tapping into a new market.

Q: Investorideas.com

In closing, every big growth sector like this goes through a cycle of cleansing and purging to let the best rise to the top. Where do you see the stocks in the sector within this cycle and what should investors be looking out for in the short term?

A: Alan Brochstein, CFA

I have been disappointed with the pace of the development of the publicly-traded stocks until recently. While the vast majority of the companies don't merit attention in my view, we are starting to see companies that better reflect the industry. The Canadian story is playing out very well, and the GW Pharma progress towards having the first FDA-approved cannabis-derived drug has been substantial.  I suggest investors focus on revenue, and I have identified 10 companies that posted sales of $5M or more in 2016, and I expect this group to grow in size this year. Investors should focus on not only sales potential and financial metrics but also management quality, balance sheet strength and access to capital.

About Alan Brochstein, CFA and 420 Investor: Founded by Alan Brochstein, 420 Investor is a subscription-based due diligence platform for investors interested in publicly-traded cannabis stocks. His affiliated New Cannabis Ventures is a content aggregation site focused on investors and entrepreneurs in the cannabis industry. Alan Brochstein, founder, has worked in the securities industry since 1986, primarily with the responsibility for managing investments in institutional environments until he founded AB Analytical Services in 2007 in order to provide independent research and consulting to registered investment advisors.

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