Lesson Number One: Don't underestimate the other guy's greed!
Lesson Number Two: Don't get high on your own supply.
Steve Kubby learned Lesson Number One the hard way.
Cannabis Science apparently still hasn't learned Lesson Number Two.
Before I go any further, disclaimer time: I did some contract writing work for Cannex Therapeutics before it entered into its ill-advised -- and now canceled nunc pro tunc (remember that term, it's important) -- deal with Cannabis Science, Inc. I intend, or at least hope, to be involved in future projects with Steve Kubby*. I am not a disinterested party here.
On the other side of the ledger, this post is not a sponsored post. It's my opinion, for which I take sole responsibility, and I'm not being paid by Kubby or by anyone else to write it except to the extent that I may move some DVDs on affiliate commission or collect some advertising revenues for page views, etc. I do not own, nor have I ever owned, any shares in Cannabis Science, Inc., nor do I hold any "short positions" or other tools for profiting through manipulation of CBIS's stock value. Nor, frankly, would I want to unless, as seems increasingly likely, CBIS stock certificates at some point become cheaper than retail-price toilet paper.
Just so we get both viewpoints in, let me link to this morning's CBIS press release for a second time. You really need to read it, if you can stand to.
It's ponderous, poorly written and topped with what may be the longest headline I've ever seen -- a headline apparently written for the express purpose of creating a patently false impression. That false impression is the notion that Steve Kubby ever "controlled" any shares of Cannabis Science. He was contractually entitled to shares in CBIS for the purchase of Cannex Therapeutics, LLC, but he never actually received those shares, as the referenced US District Court ruling [PDF] makes abundantly clear.
And that's just the sound of the CBIS lie engine turning over. It really gets started and starts clocking high RPMs with the following statement from CBIS CFO Richard Cowan:
It is important to reiterate that Cannabis Science is a fully reporting audited company, complying in every way with SEC regulations. Further, Cannabis Science fired Steve Kubby ...
Two sentences, two lies.
First, compliance "in every way" with SEC regulations would entail compliance with Item 5.02, "Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers" [PDF]. As of the last time I checked, CBIS has yet to file an amended 8K report for July of 2009 including, as Item 5.02 requires, Kubby's "written correspondence concerning the circumstances surrounding his or her resignation, refusal or removal."
Secondly, Kubby wasn't fired, he quit. Which, of course, is the reason for the first lie -- CBIS doesn't want any version of the story but its own to pass before the eyes of prospective or actual investors.
Cowan allows a paragraph break to separate the first two lies from the third:
Under the court order, Kubby was forced to give all of his shares in Cannabis Science to K&D and in return he is to be released from further actions against him from K&D on that matter.
In point of fact, the court order notes that Kubby never received any shares, cancels the purchase of Cannex by CBIS nunc pro tunc (there's that term again -- we'll get to it, I promise), and binds K&D to finance Cannex/Kubby's defense if CBIS attempts to challenge the agreed judgment.
Wait ... "agreed judgment?" Yep -- what CBIS desperately hopes you won't notice is that the court order is a judge's ratification of an agreement reached between K&D on the one hand and Cannex/Kubby on the other, with CBIS "odd man out." That agreement was reached because K&D wanted to regain control of its stock, and because Kubby wanted to regain control of the property he sold but was never paid for.
What does that agreement do? Nunc pro tunc is Latin for "now for then." It indicates a retroactive action. The court, at the request of both parties, canceled the acquisition of Cannex (and its associated intellectual properties) by CBIS as if it had never happened.
Here's where prospective investors should start taking careful notes.
Do two searches -- one on Google, one on the CBIS press release.
On Google, search for the phrase (in quotes) "whole-cannabis lozenge."
In the press release, search for the word "lozenge."
On the Google search, you'll find a bunch of results referring to Cannabis Science as the owner of the product/process in question and characterizing it as the company's flagship product.
In the press release, all you'll find is a brief dismissal of "any single lozenge" as "a minimal part of the Cannabis Science big picture."
That dismissal is lie number four. The lozenge isn't any part of the Cannabis Science big picture any more, because Cannabis Science doesn't own it. Steve Kubby does. That lozenge was the reason CBIS bought Cannex -- and that lozenge was the big thing that CBIS lost when the court retroactively canceled the purchase.
Has CBIS developed, or is it developing, any new products/processes since Kubby left the company? Maybe so, and if so, good luck to them in promoting those products/processes to prospective investors. But if you're considering investing in CBIS, be very clear on this: Anything you see advertised as in development by CBIS prior to July of 2009, or which relies on those previous developments, isn't CBIS's any more. That is the elephant in the room that CBIS is trying to distract your attention from with its garbage press release.
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* Subsequent to this post (but in no way in payment for it), I did, in fact, assume a partial ownership position (1/2 of 1%) in Steve Kubby's new company, Kubby Patents and Licenses, LLC, a/k/a "KPAL."
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