Investing in Marijuana Nutraceuticals This Marijuana Stock is for the Dogs

If you're a regular reader of these pages, you know I'm quite bullish on the legal marijuana trade.

In fact, last week I re-posted this small segment of Viridian Capital's 2015 cannabis market outlook:

We still remain very bullish on the industry and believe that there is a core, and sustainable, investment rationale for operators and investors, including: Colorado generated nearly $700 million in marijuana revenues in 2014, as the first state to launch recreational marijuana sales. This is a powerful incentive for other states to act.

Oregon and Alaska have legalized recreational marijuana. We expect seven to thirteen states, most notably California, to introduce legalization initiatives in 2015 and placement on ballots in 2016.

Positive federal initiatives in 2014: Supreme Court recognizes States’ rights to regulate marijuana; Congress bans government from interfering with the state medical marijuana laws.

M&A activity increases among existing companies, and through the emergence of strategic acquirers, in a chase for early market share/brand leadership, propping up valuations.

There's no doubt about it. I'm bullish legal marijuana. And truth be told, I firmly believe this industry will prove to be one of the greatest investment opportunities of this decade. After all, we're talking about profiting from the end of marijuana prohibition.

Imagine getting in on a similar deal back when alcohol prohibition ended!

That being said, I'm still amazed by what some folks are trying to do to make a buck in the game.

Canna-what?

Yesterday morning, I came across the following press release …

Canna-Pet(R) MaxCBD Dog Biscuits Added to Product Lineup and Available Now Fastest Selling Trial of Canna-Biscuit Hemp Based Dog Treats Leads to New Product Category at Canna-Pet.com

Yes, you read that correctly …

Hemp-based dog treats.

Look, I'm a pretty open-minded guy. And I'm not saying some folks won't use such a thing, particularly for an ailing pet. Essentially, this is just meant to be used as a nutritional supplement for dogs. But how much value really exists in such a market?

So I checked out Peak Pharmaceuticals (OTCBB: PKPH), the company behind Canna-pet.

According to the company, 41% of pet owners have considered or tried various alternative therapies for their pets, including nutritional supplements, herbal remedies and homeopathy.

To be honest, this doesn't surprised me. As a dog lover, when my last dog was sick after eating tainted Chinese dog food, I was willing to try anything to keep her alive. And thankfully, she survived a few more years. So I don't dismiss the amount of money folks are willing to spend on their pets.

Hell, in my neighborhood people hire professional dog-walkers and pay good money to leave their dogs at a place call “Doggy Daycare.”

Still, I was unable to find any solid data on the value of an alternatively-source pet supplement such as the one Canna-pet is selling. And I suspect such data doesn't even exist.

Either way, I can't imagine I'd ever invest in a public company selling hemp-based dog biscuits.

Of course, that's just a small part of Peak's business. The company actually specializes in pharmaceutical-grade, hemp-based nutraceuticals and supplements for people, too. I suspect the Canna-pet segment is not the cash cow for this development stage company.

Still, this is not a company I'd invest in. Not to say Peak won't succeed against the backdrop of hundreds of other companies doing similar things (aside from the Canna-pet stuff). Maybe it will. And certainly I wish nothing but success for anyone trying to make it in this game. But there's still an enormous amount of risk in the marijuana space, and I see no reason to take on additional risk with a $0.20 development-stage company that only got my attention because it put weed in dog biscuits.