Tilray dumps Namaste after Namaste shows why marijuana stocks aren’t ready for prime-time
By Brandon A. Dorfman
Sep 17, 2018
Nasdaq hopeful and the self-proclaimed “Amazon of Weed” Namaste Technologies (OTCMKTS:NXTTF) took a beating last week, as the fallout from their now-infamous stockholder pledge party has the company scrambling to save face with regulators, business partners, and the public-at-large. According to Canada’s French-language newspaper La Presse, Namaste is under investigation by the office of the Minister of Health following their attempts to recruit medical cannabis patients via telemedicine portals at the party, a practice that is illegal in Quebec.
Complicating matters further, La Presse reported that Tilray (NASDAQ:TLRY) responded to the news by cutting ties with Namaste, mere days after announcing a high-profile deal between the two companies.
"We were not aware and we did not approve the recent promotional activities of Namaste,” a Tilray spokesperson told La Presse in an email. “We do not believe that these types of activities will further legitimize medical cannabis with the medical community.”
The highly-scrutinized party was a celebration for shareholders who pledged not to sell their shares in Namaste for 90 days — itself a suspect proposition (more so considering the fact that three company insiders sold stock over the hold period). As La Presse reported, young women dressed in “sexy nurse” uniforms proceeded to enroll patients in Namaste MD, the company’s online medical marijuana portal, promising consultation with a nurse practitioner and a medical cannabis recommendation via email. Quebec law bans both telemedicine and nurse practitioners from prescribing medical marijuana.
Namaste fires back: “Very disappointed”
In an attempt to put out the fire, Namaste issued a press release on Friday refuting the claims made in the La Presse article. According to the statement, the company claims they broke no laws in the Province of Quebec, stating their telemedicine platforms apply only to medical and not recreational cannabis.
Namaste did confirm the split with Tilray in their statement.
“We were very disappointed to see this article published on Lapresse.ca which was not only misleading but completely inaccurate in relation to many of the claims related to the Company,” said Sean Dollinger, President and CEO of Namaste. “Furthermore, it is with disappointment that Tilray chose to terminate the agreement, as Namaste was not in breach of any terms of the agreement.”
It was a quick turn of events for a company that just a few days ago reiterated its intentions to uplist on the Nasdaq. But, as outspoken short-seller Andrew Left pointed out last week, throwing a house party that’s raided by the cops is the least of Namaste’s troubles. And while left himself is to be taken with a grain of salt — he seems to have it in for the whole of the marijuana stock sector — he makes some valid points when it comes to Namaste.
Namaste $N Canada. Some cannabis stocks are overvalued, and some are total jokes. This is a joke Drop it like its hot' after the pledge party prohibits listing in US, downside: 80%. That .50
If the 90-day pledge didn’t turn off most investors, then their alleged history of stock manipulation may. According to Left’s latest report, Namaste announced a share buyback in June, with the company looking to purchase upwards of 25 million shares. The final tally was closer to 1.5 million shares, meaning they were short 94 percent from their goal, according to Left. His theory is that it was an attempt to pump stock prices in an effort to uplist to the Nasdaq.
Namaste has a history of pushing out press releases as well — 13 in the past 16 days according to Left’s report. It’s a move which the SEC outlines as clear fraud, an attempt to pump up a stock (in fact, the SEC recently released a warning to marijuana stock investors on fraudulent practices in the industry).
It’s worth noting, however, that Citron Research has a habit of knocking down companies for their own purposes, with Cronos Group (NASDAQ:CRON) and Tilray being their most recent victims. Left himself tends to blow things out of proportion in an attempt to artificially lower stock prices.