Medmen Enterprises Inc (OTCMKTS:MMNFF) has been an active part of the fight to legalize the use of marijuana and it looks like its efforts are reaping dividends. With the state of New York still considering whether or not to legalize the adult use, the company has also boosted its earnings in recent months. In this article, we discuss the recent developments around the firm and what to expect going forward.
Take a look at the stock price movement in the last year:
Adam Bierman and Andrew Modlin established MedMen Enterprises Inc. in 2010. MedMen operates as a cannabis firm within the United States. It specializes in the possession, manufacture, sale distribution and use of cannabis in the recreational and medicinal cannabis marketplace. The company operates and owns eighteen licensed cannabis facilities in cultivation, manufacturing, and retail, which are located in California, Nevada, and New York. The company was founded in 2010 and is headquartered in Culver City, California
MedMen Enterprises is one of the leading cannabis companies in the United States with multiple assets and operations in New York, Nevada, California, and Florida. The company owns and operates licensed cannabis facilities in cultivation, manufacturing, and retail, and is one of the most well-recognized cannabis brands in the world today. The company is vocal in its support for sensible, clear and just drug laws. MedMen Enterprises is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, making donations and contributions directly to pro-legalization groups, industry organizations, and political candidates.
The company announced recently that it has added ground cannabis flower to its product offerings in New York.
Presently, the company’s stores in New York provide tinctures, gel caps, and vaporizer pens and in five different preparations. The adding of a ground flower will provide the firm’s New York medical marijuana consumers with greater product options in a fast evolving market. This announcement came on the back of earlier news released from the New York Department of Health that it would be adding opioid use as a metric for eligibility within its medical marijuana program.
Dr. Howard Zucker, the health commissioner for New York explained that the opioid epidemic in New York State was quite unprecedented and it is essential that providers are allowed as many options to enable them to treat patients in the most effective way. He added that as research results show that the adoption of marijuana can lessen the use of opioids, making opioid use a requirement for medical marijuana could possibly save numerous lives around the state.
The department stated that states which have medical cannabis programs have been discovered to reduce rates of opioid overdose death of as much to 255 when compared to other states.
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 city’s comptroller recently reported that if the state legalizes adult-use, it could have market potentially $3 billion large and inject as much as $435.0 million as revenue from taxes.
In recent months, the state of New York has increased the number of conditions to qualify for medical marijuana to twelve, and in late 2017 it expanded the kinds of merchandise which companies are allowed to sell and manufacture. For the first time ever, the new rules allowed ground flower which a popular form for cannabis intake among medical marijuana patients.
At the end of 1Q2018, the firm recorded revenues of $7.2 million, nearly 400% higher than the revenues of the last quarter. Noticeably, this figure is higher (by 62%) than the total revenues recorded in the last year, showing encouraging signs for a promising year. It is expected that the trend in this first quarter will continue and lead to much higher revenues in subsequent quarters.
Encouragingly, the firm only recorded cost of sales of $3.9 million in the quarter, constituting only 54% of the revenues, much lower than 72% 4Q2017. This is a pointer that the firm may have successfully improved its production efficiency in its sales operations.
In line with the cost of sales, sales, general and administrative expenses as a percentage of revenue dipped from 449% of revenue to 243% in the quarter. With no other major additional income, operating loss for the year was recorded at $15 million, a figure much higher than previous quarter’s figures of $6.8 million. However, net loss for the quarter was $17.0 million.
The statement of financial position reveals that the firm is somewhat highly geared. On its books, its total debt is worth an estimated $26.9 million, leading to debt to equity ratio of 0.8. It also has a liquidity ratio of 0.95, which may not be too worrying for shareholders.
MMNFF’s extraordinary first quarter results promise an exciting and possibly profitable year for the company.
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Disclosure: We have no position in MMNFF and have not been compensated for this article.