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Tuesday, November 24, 2020

Medmen Enterprises Inc (OTCMKTS:MMNFF) Takes Momentum to the Bank

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One story that has begun to get some legs in the US cannabis patch over recent weeks is Medmen Enterprises Inc (OTCMKTS:MMNFF). The last time we covered the stock we noted that it was an interesting breakout candidate. That turned out to be on the money as the stock leaped higher in subsequent action. However, the company is looking for non-toxic funding to keep the run going, and may have just landed on it.

To wit, the company just announced that it has entered into a letter of engagement with Eight Capital, under which Eight Capital has agreed “to purchase, as co-lead underwriter and joint bookrunner, along with Cormark Securities Inc. as co-lead underwriter and joint bookrunner, and a syndicate of underwriters, 13,636,364 units of the Company, on a ‘bought deal’ basis pursuant to a filing of a short form prospectus, subject to all required regulatory approvals, at a price per Unit of CAD$5.50 for gross proceeds of CAD$75,000,002.”

Medmen Enterprises Inc (OTCMKTS:MMNFF) frames itself as company that, together with its subsidiaries, operates as a cannabis company in the United States.

The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. As of June 6, 2018, it owned and operated 18 licensed cannabis facilities under the MedMen brand name in California, Nevada, and New York.

The company frames itself as “the preeminent cannabis company in the United States” with multiple assets and operations in California, Nevada, New York, and Florida. MedMen 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.

Headquartered in Los Angeles, MedMen employs more than 800 workers across the United States. It was founded in 2010 by Adam Bierman and Andrew Modlin, two visionary entrepreneurs who saw not just a tremendous business opportunity in the growing legalization of marijuana, but a chance to re-define our society’s relationship with cannabis. MedMen supports sensible, clear and just drug laws.

The Company is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, giving directly to pro-legalization groups, industry organizations and political candidates.

The company is headquartered in Culver City, California. MedMen Enterprises Inc. is a subsidiary of The Medmen Of Nevada 2 Llc.

According to company materials, “MedMen Enterprises is a leading cannabis company in the U.S. with assets and operations across the country. 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.”

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As noted above, the company just announced that it has entered into a letter of engagement for a bought deal financing at C$5.50/share (about $4.20 in US dollar terms – no joke) with Canadian investors. That final fact is actually one of the most interesting elements to the deal. It’s as if those guys want to own the whole industry, eh? You betcha. Eight Capital is based in Toronto.

In any case, traders will note 64% tacked on to share pricing for the company in the past month. In addition, the stock has registered increased average transaction volume recently, with the past month seeing 240% beyond what we have been seeing over the larger time frame.

Traders should note this as important with a float in play that’s tiny — of 28M shares.

According to the company’s release, “The Company intends to use the net proceeds of the Offering for continued expansion of its retail footprint across attractive cannabis markets, development of its cultivation and production facilities, working capital and general corporate purposes. MedMen currently operates 19 licensed facilities in California, Nevada and New York, and recently announced the acquisition of a Florida license.”

Now commanding a market cap of $122.6M, MMNFF has about $12.2M in cash on the books, which must be weighed relative to a mountain of over $86M in total current liabilities. The company has been pulling in significant revenues, with over $7M in Q1 of this year, representing over 630% quarterly y/y growth on the top line. Sign-up for continuing coverage on shares of $MMNFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $MMNFF, either long or short, and we have not been compensated for this article.

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