The continued occurrences in the marijuana industry have been great for the market. Players within the sector have continued to provide the market with news pertaining advancements in research as well as mergers and acquisitions which are meant to foster growth and synergy therein. Moreover, the increase in the entry of Fortune 500 companies within the sector is expected to play a major role in fostering the expedited growth of the industry.
The result of all the above has been the continued entry of players into the sector, specifically smaller players, who seek to capture market share earlier on. Therefore, as players continue to work towards this, the key goal for most has been to carve out a niche for themselves, achievable through either coming up with a proprietary cannabis product or being the first mover in a specific region – the final option is where they acquire already established firms and work towards boosting synergies. The firm we are discussing today has been doing the first two for the past few months.
MariMed Inc (OTCMKTS:MRMD) has been at the forefront of bringing together different industry players in a bid to consolidate it thus boosting shareholder value. The result of this has been that the company has continued to enjoy a bullish price outlook over the past few months. Their price has over the past year risen from below $1 per share to their highest price which was just shy of $6 per share.
Readers can review this price action in the chart below:
In addition to this, the company has also been enjoying a price surge over the last week, the result of which has been a price movement from about $3.5 to $4.48, their current price. This follows a period of decline in their share price during the month and necessitates the question: what could have led to the surge above?
You can further view this in the chart below:
Given the price action above, we opted to find out the driver of this and establish whether the company will continue on the upward trajectory it has been on over the past few months.
History of MRMD
The company was founded back in 2011 and headquartered in Newton, Massachusetts. Their business model encompasses the provision of consulting services to the cultivators, producers, and distributors of medical cannabis. These services include design, development, funding, operation, and optimization of their production capacity. The above is carried out under the Kalm Fusion brand name. Presently, they manage six facilities across different states in the United States.
Since our last analysis of the company – the report is available here – there has been a lot which has happened to MRMD. Below is a synopsis of this.
Consolidating the Industry
A recent report by Traders News Source, a leading equity research firm which focuses on small and medium cap firms, spoke to MRMD working towards the growth of their legal cannabis initiatives.
In the report, the company spoke specifically to the investment MRMD made in Cannabis Venture Partners. This was specifically important because of the company’s ownership of Sprout, a firm which has developed an all-in-one CRM and marketing toolkit to help in the analysis and management of the distribution of cannabis across its partners. Through this, the firm is working towards ensuring higher client satisfaction, therefore, higher sales and eventually higher shareholder value.
This venture will see MRMD become part of an ever-growing industry especially at a critical part of the value chain: distribution. As such, it is expected that the firm will reap significant benefits especially if the product is taken up by major players within the sector. The product is also meant to consolidate the industry through analyzing trends in the market and ways of making the distribution process more efficient, all to the benefit of clients.
The New Jersey Venture
The most recent news on MRMD has been a recent acquisition the firm made: the acquisition of New Jersey-based cannabis firm BSC Group, a firm which operates by competitively licensing, consulting and managing operations of cannabis firms across the country.
The result of this move for MRMD has been amazing, and here is why.
New Jersey is currently on the verge of legalizing marijuana – pending discussions on the specific tax rate on the product. As a result, the market remains strong there and is expected to grow once the product is legal. As a result, any party which currently operates in the state is expected to benefit greatly from this.
MRMD, therefore, is bound to benefit from moving this and investors know as much. The move will also see the two firms share their intellectual property and past research so as to ensure they boost their synergies going forward. In the words of Brian Staffa, the CEO of BSC Group:
“This partnership with MariMed represented the right opportunity to solidify our industry presence for the long haul, positioning ourselves as an integral element of an established team with long-term viability.”
Going forward, it is expected that MRMD will continue to work towards growing their business and ensuring it is more scalable as it is currently doing. The current investments have been in line with the latter. Moreover, the first mover advantage is expected to benefit the firm greatly especially in the case where New Jersey legalizes marijuana. Therefore, we remain bullish about the future of MRMD.
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Disclosure: We have no position in MRMD and have not been compensated for this article.