“Kings of Canadian Cannabis” — Michael Robinson’s “$2,000,000 By This Time Next Year” Marijuana Teaser

What's being teased by Radical Technology Profits for the Oct. 17 Canadian legalization of recreational marijuana?

By Travis Johnson, Stock Gumshoe, September 20, 2018

Michael Robinson runs the technology/venture newsletters for Money Map Press, and he’s out with yet another marijuana promo — after all, any newsletter that doesn’t jump on board the marijuana stock rocket is deemed pretty much irrelevant these days, just like any newsletter without a “crypto expert” was ignored in January.

So yes, now Michael Robinson is being touted as “America’s leading Cannabis Investment Expert” (the capital letters make it real, right?) And they’re selling Radical Technology Profits ($1,950, nonrefundable — though there is a “after a year, if none of these stocks went up 10X, you can call to request a refund” promise) by offering to reveal three “Cannabis Kings” that might turn your small investment into millions.

Which, of course, is the dream every speculator has today, after watching the crazy gains that we’ve seen in several of the big marijuana stocks over the past few months and, most recently, the news coverage of the ludicrous Tilray (TLRY) stock spike.

Did you see that one? Tilray is the newly US-listed Canadian medical marijuana company that went from a $2 billion valuation to a $20 billion valuation over the past month on the strength of a tiny float and a huge surge of investor enthusiasm, with intra-day $5-10 billion moves earlier this week and a crazy up-100% down-50% day on Wednesday. Completely nutty and divorced from reality, of course… but still, if you traded the stock and sold to book those gains, your cash is real.

So what is it that Robinson is promising? He talks up three “Cannabis Kings” in the ad…

“There Are Three Companies in Particular I Want to Highlight for You Right Now.

“These Are the Ones I Think Will Hand You a Massive Chunk of That Money.”

And, in what seems to have caught the eye of Gumshoe readers…

“… the first company could make $1 billion before New Year’s Day.”

Presumably that’s $1 billion for them, not for us, but still… that’s a lotta money, right?

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So what do we get in the way of clues about this first “Cannabis King?”

The ad says this company is an existing greenhouse operator, they sell bell peppers and other produce that they grow in their greenhouses across Canada. Including, apparently, one that’s poised to be switched over to marijuana cultivation…

“… state-of-the-art, 10.5 million square-foot hydroponic greenhouse in Western Canada.

“It’s roughly the size of 95 football stadiums.”

And part of Robinson’s spiel is that the company already has these greenhouses, and is ready to go, and can make much higher profit margins just by switching from peppers to pot…

“… last year, the company sold $155 million worth of its vegetables to grocery stores across the U.S. and Canada….

“They Are Moving from $2-a-Pound Peppers to Growing Cannabis That’s Worth More Than $2,000 a Plant.”

A few other clues:

“… they’ll be able to grow 75,000 kilograms a year.

“At a government-approved retail price of $8 per gram for recreational marijuana, that’s $600 million worth of marijuana.

“But that’s just the beginning.

“Because in anticipation of the October 17 date, they’ve earmarked another 3.7 million square feet of greenhouse space for cannabis cultivation.

“When it’s all said and done, they’ll be able to grow as much as 300,000 kilograms of marijuana every year.”

OK, so that’s $2.4 million worth of pot at retail prices, assuming that $8/gram is what we’re working with in Canada. That is pretty close to what people are paying now, according to Statistics Canada (average for the country is C$6.82 right now), though much of that is still black market so who knows how good the data is (it’s crowdsourced). Pricing will be regulated and licensing and distribution will be controlled on the provincial level, apparently, and the goal is to gut the black market so presumably prices will not climb too much higher than that. If US states are any indication, maybe more money will be made by those who can charge more — creators of value added stuff, special strains, edibles, or things like that, but we won’t know much about the economics of the business in Canada for a while.

But anyway… who is this? Will they “be in a prime spot to own the market” on October 17? Are they really going to, as Robinson suggests, “Make Just Over $1 Billion This Year from the Sale of Marijuana (and turn $525 million of that into profit?)” That’s what he bases his dreams of 46,000% returns on.

So to sum up, here’s a bit from the order form:

“Cannabis King #1: The Billion-Dollar Greenhouse.

“This company currently sells peppers and other vegetables at $2 a pound.

“But in preparation for October 17, they’re moving from $2-per-pound peppers to growing cannabis that’s worth more than $2,000 a pound.

“That’s because they’re turning a 10.5-million square foot vegetable greenhouse into a billion-dollar-a-year cannabis farm.

“Virtually overnight, they’ll become the largest marijuana greenhouse in the world.

“And with distribution networks already established all over Canada, nobody else will be able to touch them.

“It’s trading for a mere $5 a share right now. But not for long.”

So… it’s not at $5 a share anymore, but that’s probably not so surprising — nothing stays put for very long in this crazy little sector. This is, sez the Thinkolator, Village Farms International (VFF.TO VFFIF), which is indeed a vegetable grower that’s getting into the cannabis space. And it was at C$5 a share a month ago and close to US$5 just a few days ago, though it’s now in the C$7-8 range (or US$6, should you do your calculating south of the border).

They’re doing this with a joint venture — they’ve teamed up with Emerald Health Therapeutics (EMH.TO, EMHTF) in something that they call Pure Sunfarms, which has bene licensed to grow marijuana in now 550,000 square feet of their huge 1.1 million square foot Delta 3 greenhouse complex. They say it will be in full production within a month, and that they’ll get the other half of the complex growing pot by the end of the year.

I have no idea whether Village Farms will be better at scaling up massive pot production than the big indoor growers, but they will probably have lower costs than many of them — so that’s somewhat appealing, since one substantial risk is that the massive number of growers (and the continuing existence of the black market) could mean that marijuana margins in Canada will be destroyed by overproduction and the competitive attempts to establish brands in the early years. And they do have the vegetable business going for them, so if marijuana doesn’t work out they could get back to growing peppers, which was a profitable business for them in the past… not necessarily enough to support a $250 million valuation, but that puts a floor under the stock.

They do only own half of this business, but what they’re contributing is growing space, not cash, so they are taking a relatively small risk. Emerald is putting C$20 million in to build the growing capacity and set up the business.

You can see the presentation here if you’re interested — all the numbers Robinson cites are there. And one that jumped out at me really served to highlight why I haven’t been a big investor in the Canadian cannabis giants:

“Canadian Cannabis demand estimated to grow to ~734,000 kg by 2021”

That number is from the 2016 estimates made by the Canadian government, though earlier this year Health Canada also estimated 1 million kilograms by the end of 2018. Those numbers have been driving the massive investment in capacity that these marijuana growers have been making with their stock market millions, everyone wants to be ready and many of these companies have large stockpiles of dried flowers and other products set aside to meet the initial demand.

But think about those numbers: 1 million kilograms? That’s less than the capacity already planned or in production from just two of the largest companies, Canopy Growth and Aurora. If there’s really a million kilograms of demand when the gun is fired for legalization to begin there will indeed be a shortfall, most likely, but there doesn’t seem to be any likelihood of the government allowing windfall gains by price gouging… and capacity will ramp up fast.

That means I have no confidence at all in what the market dynamics might be, whether there will be oversupply like in many of the US states who have legalized, or rampant unmet demand that keeps the black market in clover (legalization will make illegal pot more appealing, too… the cops wouldn’t pull you aside and ask for a receipt proving that you bought your joint from a legal retail location instead of from the neighborhood dealer).

But yes, if you’re confident that supply and demand will not squash the industry, Pure SunFarms, half owned by Village Farms, is likely to be more successful than most of the smaller upstarts — if only because growing in greenhouses is likely to be cheaper, per gram, than growing in urban warehouses like some other producers.

So I’d grudgingly say that this one is less scary than most pot growers I’ve looked at, even though I’d guess that the eventual winners in the Canadian (and American) pot businesses to probably be whichever of the gigantic players (maybe Canopy, maybe someone else) who are able to build consumer brands or value-added products and differentiate themselves in what is likely to be a competitive agricultural business with commodity pricing. At least they’re successful low-cost farmers, and have the capacity already mostly built.

And let’s take a quicker look at the other two…

“Cannabis King #2: Winning the $100 Billion Medical Marijuana Race.

“My second pick is another tiny Canadian cannabis firm on the cusp of a historic revenue surge.

“Leading up to full legalization, this company made a brilliant move: They established medical marijuana footholds in 11 different countries, including Germany, Italy, and the U.K. all while maintaining 74% profit margins and doubling its revenues every year….

“… once the October 17 legalization goes live, this tiny company is primed to become the leading exporter of marijuana throughout the globe. Meaning their sales are about to skyrocket.

“In fact, just days ago, this firm signed an exclusive $22.8 million sole-supplier contract with one of Canada’s biggest medical marijuana firms.”

That’s almost certainly (Aphria APH.TO, APHQF), which has been touted in the past as a high-margin producer and which expects to have about 250,000 kilograms of production underway within the next year. They have been expanding overseas, which might turn out to be important if Canada really becomes an overproducing country, though other major players have done so as well. And they’re only tiny in the context of the bloated crazy stocks, they do have a $4 billion valuation — which is plenty rich. If they produce 250,000 kilograms and sell it at $8 a gram, which they won’t (they’re wholesale, not retail), then that’s $2 billion… so they’re trading at 2X prospective sales. If they could generate a 75% profit margin at that point they’d be in heaven, but that’s not particularly likely — I’ll let you make y our own guesses on how it will go, I haven’t dug into this one enough to make any educated guesses.

And one more…

“Cannabis King #3: The Backdoor into the Canadian Pot Boom.

“Now, the third company in my dossier is really small – currently trading for under $2… it’s a tech startup on the verge of becoming the exclusive provider of cannabis breathalyzers to all 1.4 million law enforcement officers in North America.

“And with their recently filed patent, they could completely corner the market for a device that is critical to the public safety of citizens all over the world.

“This is the kind of stock you can turn every $1 into $30, $50, or even $75….”

That is almost certainly little Cannabix Technologies (BLOW.CX, BLOZF), which is trying to develop a breathalyzer that will detect THC in the breath. There are others trying to do this, including private Hound Labs, but no one has yet created a working prototype that has been tried in real life as far as I can tell… and it’s not necessarily an easy task or a guaranteed win, since THC is not as clearly identifiable in the breath as alcohol. THC does show up in the breathalzyers models they’ve been developing for a couple hours after smoking, but we’re a ways from having evidence that would be likely to work in court that tells you a certain level constitutes “impairment.”

It’s surely intriguing, and driver safety is a major aspect of dealing with recreational marijuana, but I don’t know that science has solved things yet and I have no idea whether one of the emerging companies really has the “killer” patent for this technology. The company itself is indeed very small, trading at about $1.50 OTC in the US and with a $150 million market cap, but it’s really an R&D firm trying to develop a product at this point. I would not assume that the fact that there’s only one publicly traded company that’s a pure play on a particular attempt at a THC breathalyzer means that there’s only one company that can develop a breathalyzer (or similar instant test for marijuana intoxication). I imagine there are lots of folks working on this in labs elsewhere, and have no idea whether Cannabix has a meaningful scientific or product development lead over anyone else.

So there you have it — yes, I’m still skeptical about pot stock valuations… but that doesn’t mean you can’t go forth and make lotsa money if you’re lucky and nimble. I avoid most of the space because I don’t have any clear view of the economics of the industry, but it’s certainly been fun for speculators so far… just please make sure you’re not betting more than you can afford to lose on these exciting speculations, and keep your risk level and your exit in mind. In markets like this it has historically been important to keep at least half an eye on making sure that if it gets ugly, you want to be able to turn off the course before the lemming in front of you leaps off the cliff… and set up your portfolio so you don’t end up living in a cardboard box if you aren’t able to make that turn.

OK, boring old guy lecture over. What do you think? Like Aphria and Village Farms and Cannabix? Or do you prefer the biggies like Canopy or Aurora, or even the terrifying Tilray? Think it’s the small guys who will win in the end? Let us know with a comment below.


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Bradley short
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Bradley short

Previously and in one of his (Michael Robinson) other publications he is very “high” on Cronos.

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ginaroye
Member
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ginaroye

I’ve been watching that one.

torgo3000
Member
👍113
torgo3000

Oddly enough, his emails don’t really seem to “get it” on the potential impact of the Ginkgo deal.

If Ginkgo pulls it off (and it seems likely they will), Cronos will then be able to mass produce THC, CBD, CBG, etc – faster and cheaper than anyone else and at mass scale. You’d think Robinson would be jumping up and down and pounding the table over that. Instead, all he said was that it seems apparent they have some kind of beverage plans in their future.

torgo3000
Member
👍113
torgo3000

For anyone potentially interested who has no idea what I was rambling on about… Ginkgo Bioworks is a DNA engineering company in Boston. A past project they’ve done is identifying the DNA needed for rose oil and citrus oil and imprinting that DNA onto brewers yeast. After that, it’s the standard brewing process – except instead of beer, you get rose oil. Cronos and Ginkgo announced a deal where Ginkgo is going to develop the same process for eight cannabinoids – THC, CBD, and six more rare ones. The goal is to be able to create them in 200L or… Read more »

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thomas
Irregular
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thanks for the education it is appreciated.
Warmest regards
Zack

lora4722
Member
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lora4722

Does the recent class action change your thinking?

torgo3000
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torgo3000

I apologize for the long read, but this is important – and there’s an even more important warning involved. So think it through for both the good and bad side of the current share price. First, that class action lawsuit doesn’t bother me a bit. Offhand, I’d say from having listened to the conference calls that management did not mislead investors at all. My understanding is that the suit is based on part of Citron’s explanation of why they believed that Cronos stock is overvalued. Citron had noted that Cronos only announced they had distribution deals in place with the… Read more »

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eleanor
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eleanor

Thanks for your insights and analysis, torgo3000.

steveflick
Irregular
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I bought $2k Cronos CRON in mid April, now up 140.04%; nice.

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chuck harowitz
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chuck harowitz

cgc, aphria, acbff, hexo control half of the provincial contracts in canada, village farms has great growing area, blozf doesnt have the revenue of cgc, aphria, acbff, hexo, it is important to understand that companies will differentiate thc or cbd or both, aurora is buying hemp companies for cbd and may have the most hemp at this time, in my opnion

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Randall Hart
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Randall Hart

blozf isn’t in market of marijuana, they are attempting to create a machine to tell % in your body. Like police use to check for alcohol. They claim to have patents for their system but sre trying to perfect it.

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jlh
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jlh

I like village farms -they might just decide to develop a cannabis heritage tomato now that monsanto has ruined tomatos in the US

tradenewbie
Member
👍10

I’m more inclined to think the #1 “King” that Michael is referring to is Canopy Growth based on what I read in an article labeled, ” Pot replaces peppers at world’s largest cannabis farm in Langley, B.C.”. and not “Village Farms Int.” Thank you for all the time you invest in “Stock Gumshoeing”. Regards.

Peter Z
Guest
Peter Z

What about IMLFF / IN.
They are trying to develop synthetic marijuana compounds for medical use ,
have a market cap of only around 100 million
why do I never hear anything how about them anymore ? ? ?

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bluechipholder
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bluechipholder

frigging Tilray went through the roof.. missed that one.

ginaroye
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ginaroye

I know! Me tooooooooooooo.

Dave S.
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Dave S.

You missed the subsequent plunge, too.

steveflick
Irregular
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I bought $2k TLRY Tilray in late August @ $52. Yes, Wednesday wild ride, market closed TLRY trading 4 times due to extreme volatility. even with 9-20 closing, todays down big %, I am up 239.58%. Think I will sell $2k my basis, and reinvest it.

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Razor
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Razor

I put $700 into TLRY at just under $30 and enjoyed the wild ride on Wednesday but was well aware that it was a crazy roller coaster day and watching the surges and subsequent blips I cashed in at just over $220 a share – pretty happy with that result

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Hoops
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Hoops

bought 300 shares at 25.00, sold 200 shares at over 210.00, still have 100 in it. TOO THE MOON ALICE!!

Kris Hawkins
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Kris Hawkins

There is a new Series A offering from a Canadian startup called Stewart Farms which could be an opportunity for investors to get in on the ground floor of a indoor vertically-grown marijuana farm

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SillyRabbit
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👍99

How would we be able to get into a Series A round?

Kris
Guest
Kris

Contact any of the team at Stewart Farms (Kevin, Tanner etc)

andrea
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andrea

is there a series-A platform whio/which offers this start-up? (like startengine)?

SoGiAm
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👍11363

$T Andrea > https://about.att.com/content/csr/home/blog/2018/05/meet_the_2018_atta.html Through the AT&T Aspire Accelerator, we support startup companies that use technology to improve education and help students achieve a bright future. Find out how these startups are changing the world—and how you can support them too! #Best2U! 🙂 #dyodd 🙂 #niaia 🙂 #TGIF 🙂 fgif geauz Jammin’

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Lelia
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Lelia

Two other top companies mentioned were HYYDF and TGODF. A huge 375,000 square foot greenhouse for cannabis has just been built in Cathedral City, California near us in Rancho Mirage, and is owned by a company listed as SNNVF.

ginaroye
Member
👍30
ginaroye

I think I owned that one. One that moved pretty good today was EarthScience. ETST is going to be featured on Shark Tank with Kevin Harrington, he going to do a commercial for them, his team has selected them to collaboratively develop its own As Seen on TV DRTV media campaign. ETST will include a 60 sec DRTV commercial spot to be aired 300 times in 10 regions.
https://globenewswire.com/news-release/2018/09/20/1573673/0/en/Earth-Science-Tech-Inc-ETST-Commences-DRTV-Media-Campaign-with-Former-Shark-Tank-Star-Kevin-Harrington-s-Award-Winning-As-Seen-On-TV-Production-Company.html

steveflick
Irregular
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thanks ginaroye, I’ll take a look

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GeneH
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GeneH

RE: etst………………….looks like the front runners have already purchased this stock.

steveflick
Irregular
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mid April to June I bought $2k in each of three you mentioned, and now gains are HYDDF Hexo (formerly Hydropothecary) + 105.19%, TGODF The Green Organic Dutchman + 41.49%, and SNNVF Sunniva – (loss) -32.2%; I am sticking with that one for awhile, their first harvest is supposed to be this fall. SNNVF based in British Columbia.

Hoops
Guest
Hoops

TGODF their product is also supposed to be organic. Big plus if correct.

ladylothar
Member
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ladylothar

michael robinson is my second favorite, the first being travis, who saves me lots of money not subscribing to other “offers” as an irregular member. robinson has never been that expensive and i have a subscription till 2025 that i got for about $200. very valuable. i started following his marijuana threads and reports 2 years ago and have bought more than half and made big profits on most.

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jdodge46
Member
👍39
jdodge46

I’m a subscriber to Robinson’s Nova-X service and have found it to be very good through the years. Not all winners, of course, but overall I’ve made some nice money with him. Not ready to spend the kind of $ he wants for his Rad Tech service, however.

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hausman
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hausman

Ladylothar, where can I find Travis?

Lynn Clark, Stock Gumshoe
Admin
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Hi Hausman-
Travis is our president and the Gumshoe himself here at Stock Gumshoe. If you’re on this site, you’ve found him! If you have any questions, please contact me at Lynn@StockGumshoe.com.

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hank
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hank

WOW, what did you have to do to get his 2,000 one year sub for 200 until 2025.

Joan White, retired Registered Investment Advisoor
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Joan White, retired Registered Investment Advisoor

I think I will stay with traditional investments, thank you very much!

ginaroye
Member
👍30
ginaroye

There is a company that is able to reduce nicotine in tobacco, and it’s been moving pretty good it’s XIIl 22nd Century. It’s closed at $2.81 today. Been a steady mover for me. I got it at $2.31.
I’m not a stock guru though. Travis is the man.

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BJI
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BJI

is “XIIl 22nd Century” ALSO able to reduce the other noxious chemicals in tobacco smoke INCLUDING THE CHEMICALS THAT CAUSE CANCER???!!! Nicotine IS NOT the real killer in tobacco smoke!!! WHAT ABOUT CARCINOGENS IN MARIJUANA SMOKE???!!! OH YEAH, they’re there but WHO CARES???!!!

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EM Shorts
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EM Shorts

I reply to this comment specifically. The “CARCINOGENS IN MARIJUANA SMOKE” are to a large extent overcome in the user by the presence of CBD . . . Clearly, the CBD in marijuana smoke is effective in preventing cancers. I have heard that dope smokers have less lung cancer, and presumably other types of cancer as well, than non-smokers, and I think I believe it. – Though I stopped smoking the stuff 40 years ago, I may look into smoking / otherwise using high CBD products.

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lindy003
Member
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lindy003

Don’t smoke it…..vape it!

mark C
Guest
mark C

That is BLO not BLOW :0