MedMen Enterprises (OTCQB: MMNFF) is the preeminent cannabis company in the U.S. with assets and operations nationwide. Based in Los Angeles, MedMen brings expertise and capital to the cannabis industry and is one of the nation’s largest financial supporters of progressive marijuana laws.
Analysts tracking the stock believe that MedMen is presently at a critical inflection point and 2018 could be a year of multiple achievements for the company, as it aggressively pursues its diversification and overall expansion strategies. Furthermore, from a sectoral viewpoint, the accelerated interest of the market in Cannabis space has also made MedMen a favorite play in the sector. Also, the muted performance of the stock in the recent past has created an incredible buying opportunity with significant upside potential.
Key and unique differentiating factor:
Recent Developments:
- The Company opened its first branded store in the Las Vegas, tourist mecca and entertainment capital of the world. Also, MedMen Las Vegas Airport will be the Company’s second branded store in the tourist mecca.
- The company completed its first harvest at its state-of-the-art cultivation and production facility outside Reno, Nevada. The test crop was only a fraction of the facility’s 10,000 pounds planned annual production capacity, but it went very smoothly, and all systems functioned as designed, according to Dan McClure, MedMen’s vice president of agronomy.
- MedMen recently announced that it had added ground cannabis flower to its product offerings in New York. MedMen stores in New York currently offer vaporizer pens, tinctures and gel caps in five different formulations. The addition of ground flower will give MedMen’s New York medical marijuana patients greater product choices in the state’s fast evolving market.
- The medical marijuana program within the state has continued to rise just as the state considers becoming the tenth state in the United States to legalize adult-use for marijuana. The New York City comptroller recently reported that if the state legalizes adult-use, it could see a $3 billion marketand $435 million in tax revenue.
- In recent months, the state has expanded the number of conditions that qualify for medical marijuana to 12, and late last year it broadened the types of products companies can manufacture and sell. For the first time, the rules permitted ground flower, a popular form for cannabis intake among medical marijuana patients.
- Acquisition of Treadwell Nursery: MedMen has announced the acquisition of Treadwell Nursery. The transaction is pending customary regulatory approvals.
About the Company:
Over the years, MedMen Enterprises has established itself as one of the leading cannabis companies in the United States with multiple assets and operations in New York, Nevada, California, and Florida. The Company operates scalable, highly-efficient cultivation facilities using the latest in agronomic technology and sustainable techniques, and its manufacturing facilities use standards comparable to those in the biotech and pharmaceutical industries.
MedMen owns and operates two cultivation and production facilities, one in Nevada and the other in New York. The Company is currently developing additional large-scale cultivation and production operations in California and New York and a genetics facility in Nevada, while also expanding the cultivation area of its existing Nevada facility. Management intends to establish a strong foothold in these states as they offer high-growth potential due to their market depth, supply-demand dynamics, and regulatory framework.
Latest Quarter Financial position:
Revenues and Profitability: Sales for the three months ended March 31, 2018, were $7.2 million as against $0.9 the three months ended March 31, 2017. Sales for nine months ended March 31, 2018, were $10.5 million compared to $1.2 million for the nine months ended March 31, 2017. Operating loss for the quarter was $15 million. However, net loss for the quarter was $17.0 million.
Liquidity: At the end of March 31, 2018, the Company had cash and cash equivalents of $12.2 million.
Key risk factors and potential stock drivers:
- MMNFF is still an early stage cannabis company. Therefore, its ability to ramp up operations/profitability, as it grows its market position and seeks ways to monetize it would be a key value driver for the company and its shareholders.
- It said the company is likely to see meaningful results from their current developments. Analysts remain hopeful that these payoffs will take shape quite soon and stay bullish about the stock price.
- Regulatory Risk: Notwithstanding the current operational and marketing progress, the company continues to remain exposed to regulatory and legal risk. In this sector, the regulatory framework and science are rapidly changing and evolving. Therefore, new companies are emerging, and regulatory risk always exists for the players in the industry.
- MMNFF’ ability to maintain liquidity and financial flexibility to fund its incremental capital requirements will remain crucial for the company. Additionally, the industry is competitive, and MMNFF will be competing with many other and better-financed companies.
Stock Chart:
Comments:
- On Monday, July 23th, 2018, MMNFF was at $3.64, on volume of 30.8K shares exchanging hands. Market capitalization is $102.7 million. The current RSI is 50.35.
- The present support and resistance levels for the stock are at $3.1770 & $3.9970 respectively.
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