At a political luncheon in Miami a few years back, a celebrity keynote speaker got up to address the crowd:

“We’re losing badly the war on drugs. You have to legalize drugs to win that war. You have to take the profit away from these drug czars.”

The speaker went on to argue that the legalization of all drugs in America made perfect sense and could generate badly needed tax revenues.

Was the speaker an ultra-liberal lawmaker, like Bernie Sanders? Or Elizabeth Warren? Nope.

It was Donald Trump, who now sits in the Oval Office. That luncheon was back in 1990 and since then, Trump has reversed his stance on cannabis. But in rhetoric only.

Following Trump’s unexpected election as president in 2016, the federal government has periodically fulminated against pot but done nothing tangible to impede the state-level legalization of marijuana.

The unstoppable trend toward marijuana legalization has spawned the creation of a multitude of penny stocks. Today, I’m spotlighting Abattis Bioceuticals (CSE: ATT, OTC: ATTBF), a penny cannabis stock with a market cap of $24 million.

Abattis Bioceuticals extracts cannabis or cannabinoids from hemp plants and uses those extracts to create products. Is it a viable company or another penny stock booby trap?

My ATTBF stock prediction will answer those questions, with an examination of the company’s prospects in 2019.

What Is Abattis Bioceuticals?

Based in Canada, Abattis refers to itself as a “life sciences and biotechnology company which aggregates, integrates, and invests in cannabis technologies and biotechnology services for the legal cannabis industry developing in Canada.”

Abattis claims to have “developed and licensed natural health products, medicines, extractions, and ingredients for the biological, nutraceutical, bioceutical, and cosmetic markets.”

If that’s true, I’m wondering where the revenue is. I’ll get to that in a minute.

Abattis also claims that it seeks the acquisition of intellectual property rights to ag-tech for use in the extraction and processing of botanical ingredients.

The company’s Canadian financial filings reveal it has access to a licensed laboratory facility, and an industrial size laboratory “currently in the process of obtaining a Health Canada dealer’s license.”

I see lots of red flags here. This company doesn’t have tangible operations. There are vague mentions of partnerships, but there’s no real operational company yet.

How Has Abattis Bioceuticals Stock Performed?

• Over the past year, ATTBF shares have fallen 87.3% whereas the S&P 500 has lost 7.3% (see chart).

How Has Abattis Bioceuticals Stock Performed in 2017/2018?

• In 2017, Abattis Bioceuticals rose 286% whereas the S&P 500 gained 19%.
• In 2018, Abattis Bioceuticals fell 88% whereas the S&P 500 lost 5%.

Who Are Abattis Bioceuticals’ Rivals?

22nd Century Group (NYSE: XXII)

With a market cap of $271.1 million, this biotech focuses on genetic engineering and plant breeding and is developing a new strain of hemp with zero THC, the main psychoactive compound found in cannabis (the compound that produces the “high” that’s keeping marijuana illegal on a federal basis in the United States).

22nd Century Group also is creating genetically engineered tobacco plants with 97% less nicotine than conventional strains, as well as a strain high in nicotine that allows for the lowest tar-to-nicotine ratio in the cigarette industry.

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The low-nicotine variety has proven effective in helping smokers kick the habit. At present, 22nd Century is the only company in the world capable of producing tobacco cigarettes at this extremely low level of nicotine, without having to use potentially harmful artificial extraction or chemical processes.

INSYS Therapeutics (NSDQ: INSY)

This biotech (market cap: $259.9 million) is developing pediatric epilepsy treatments. INSYS has other products in the pipeline that could boost its shares exponentially if they receive approval.

INSYS is developing cannabis-derived drugs for easing opioid dependence and moderate-to-severe pain. The company already has received approval for Dronabinol, an orally delivered solution that eases nausea and vomiting associated with chemotherapy and AIDS.

Zynerba Pharmaceuticals (NSDQ: ZYNE)

Zynerba is developing transdermal synthetic cannabinoid treatments for both pediatric and adult epilepsies.

With a market cap of about $67.6 million, Zynerba could witness explosive growth. However, because it’s lagging in the regulatory approval process, Zynerba is particularly risky.

Will Abattis Bioceuticals Stock Go Up in 2019 (Should You Buy?)

There’s ample reason for investors to be bullish about fledgling marijuana companies.

Small-cap stocks will offer the most explosive gains in the marijuana industry. Not only do these companies give investors opportunities to get in at bargain prices and speculate on skyrocketing cannabis success, but they also make great takeover targets for Big Pharma companies looking to break into this nascent industry.

Regrettably, Abattis Bioceuticals isn’t one of those small caps.

Sure, Abattis talks a good game. Management has cobbled together a slick presentation. Problem is, there are plenty of marijuana penny stocks that seem good on the surface but sport weak fundamentals.

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Abattis says it has successfully developed and licensed several medicines, ingredients, extractions, and health products for multiple markets. It claims to be positioned as a leader in the cannabis industry as a “fully integrated life sciences and biotechnology company.”

The company has a license to produce in Canada, and apparently has a captured fertilizer subsidiary. It has a subsidiary called Select Strains Genetics with a “portfolio of over 140 laboratory tested craft cannabis strains.”

Abattis has a branding and sales company, which provides a nutritional supplement that is designed to “activate the endocannabinoid system and nourish endorphin release in response to chronic pain.”

Abattis also offers a vaporizer, and a few different joint ventures for other marijuana-related products.

So it begs the question: why, amid of all of this impressive sounding activity, does the company generate almost no revenue? In fact, Abattis has generated operating losses of over $26 million in just the past year.

The stock currently trades at about six cents per share. For much of the past five years it has traded between four cents and six cents a share, with a spike up to 83 cents in mid-December 2018.

Abattis is a micro-cap that’s adroit at spending money but alas, not at making revenue. There is nothing whatsoever to indicate that the stock is either cheap or undervalued.

Here’s a video that looks at the dangers of penny stock investing.

Will Abattis Bioceuticals Go Down in 2019 (Should You Sell?)

Abattis’ products and services aren’t distinctive enough to give the company significant traction in the marijuana market. It’s unlikely that a catalyst will occur in 2019 that can move the needle on this penny stock.

Abattis appears deeply immersed in the marijuana industry, but there’s little apparent substance to the company’s ties to cannabis. I see mostly smoke and mirrors.

Penny stocks seem alluring, because they offer the potential for massive gains in a short amount of time. But most penny stocks go south, leaving investors holding the bag.

Abattis has benefited from overall hype in the marijuana space. A favorable headline about the cannabis industry has the power to temporarily boost the stock, as we saw last year. But even at six cents a share, this stock is absurdly overpriced.

Overall Abattis Bioceuticals Forecast and Prediction for 2019

I doubt this stock will make any kind of meaningful move for the next year. In 2019, I expect it to trade between four cents and seven cents per share.

Sure, there is the possibility that it could go much higher in the event of news that lifts the entire sector. But don’t bet on it.

As far as the long-term is concerned, I don’t see how this company will be able to generate any significant revenue. Abattis doesn’t provide a breakthrough product or service in the marijuana field. The company’s true forte is self-serving promotion.

There’s money to be made in cannabis stocks, but you should stick to quality. Choose companies that generate actual revenue and earnings. Marketing brochures are no substitute for profits.

Don’t throw your money down the drain. Avoid Abattis Bioceuticals.