How Medmen Enterprises Inc (OTCMKTS:MMNFF) is Navigating Stormy Waters

How Medmen Enterprises Inc (OTCMKTS:MMNFF) is Navigating Stormy Waters



Shares of Medmen Enterprises Inc (OTCMKTS:MMNFF) are a matter of strong contention right now following the stock’s hold of key support at the $2.50 level and then the reinforcing hold at the 20-day exponential moving average this week. That could set up a test of the 50-day MA next week in the $3.75 area, but the narrative has to fall into place from here. To that end, the company just responded to a recent challenge by two early investors in a predecessor version of the company.

According to the release, “On January 8th, two early investors in MMMG, LLC, a precursor company to MedMen Enterprises Inc. filed a complaint in Los Angeles Superior Court alleging unfair treatment regarding the disposition of their investment in MMMG. The plaintiffs alleged that they are being unfairly prevented from cashing out of their interest in MMMG, which currently holds approximately 179 million shares that are redeemable and exchangeable on a one-for-one basis for Class B Subordinate Voting Shares of MedMen Enterprises Inc. The shares are locked up, thus prevented from trading in the open markets, until November 25, 2019.”

Medmen Enterprises Inc (OTCMKTS:MMNFF) frames itself as a company that, together with its subsidiaries, operates in the cannabis space 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, MMNFF just responded to a recent challenge by two early investors in a predecessor version of the company. One look at the chart shows basically flat action added to share values of the listing over the past month of action. Furthermore, the listing has seen a growing influx of trading interest, with the stock’s recent average trading volume running 21% above its longer-run average levels.

The following is a statement by Daniel Yi, MedMen’s senior vice president of corporate communications: “These are frivolous claims, and it appears the judge agrees. Today, a Los Angeles Superior Court denied the plaintiffs’ request for a temporary restraining order and preliminary injunction. Despite the agreement reached by an independent committee to safeguard the best interests of our shareholders, including MMMG and the funds, the plaintiffs; Omar Mangalji and Brent Cox, now seek special treatment. The committee decided to lock up more than 90 percent of the shares owned by the three entities at least until November 25, 2019. The interests of all of the stakeholders impacted were included in the process and the feedback was overwhelmingly positive. Mr. Mangalji and Mr. Cox have already received cash distributions representing a complete return of their capital plus a substantial gain. It’s unfortunate that Mr. Mangalji and Mr. Cox have chosen this path. This is a meritless claim by a minority investor. This is clearly and egregiously an attempt to devalue the shares of the enterprise for their own personal gain at the expense of all other stakeholders. MedMen remains focused on building one of the leading cannabis companies in the world and we feel confident we will prevail on that mission and against this meritless complaint.”

At this time, carrying a capital value in the market of $1.53B, 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. We will update the story again as soon as developments transpire. 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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