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Friday, November 27, 2020

Medmen Enterprises Inc (OTCMKTS:MMNFF): Financial Affliction to Set New Trends in the Cannabis Industry

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The United States-based cannabis company, Medmen Enterprises Inc (OTCMKTS:MMNFF) is feeling some unpleasant financial pressures.

The company, with operations in California, Nevada, New York, and Florida, owns and operates 19 licensed cannabis facilities in cultivation, manufacturing, and retail. It is considered to be one of the largest retail marijuana chains in the States.

The company has recently been forced to secure hundreds of millions in credit to stay afloat. This financial problem that the company is currently facing is an eye-opener to those who are lured by the business and plan to invest in the cannabis trade.

Shares of the company have tumbled more than 50% from its October peak of $6.95. The net worth of Medmen Enterprises has sunk from $3 billion in 2018 to $1.6 billion in the recent times as is suggestive from the financial reports of the company.

Despite the fact that the business of growing and selling of weed is a very impressive one and that the time is ripe of the cannabis industry to prosper, the heavy taxes and the limitations on the dispensaries are turning as a speed-breaker in the path of the growth. According to the reports of CNBC, the company lost $131 million during the last six months of 2018, which sums up to $2 for each dollar of marijuana sold.

However, Medmen Enterprises Inc (OTCMKTS:MMNFF) has been struggling to create an illusion of growing, prospering and swimming upstream. This is largely the result of the immense advertisements that the company carries out time to time to change the stoner stereotypes and attract new and improved customers.

The company has been constantly trying to change the stereotypes that have been associated with marijuana through its social platforms. This however, doesn’t come much as a respite for the company as, “At our current operating level, we will not have sufficient funds generated from operations to cover our short-term and long-term operational needs,” reads a financial report that was released at the end of February 2019.

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There have been a series of other problems which encircle the company, which are not relating to the cannabis market. The company’s CFO was alleged for racism and has been put on trial before the lawsuit. There have been other allegations on the company as to the company has run schemes to keep stock prices up. Another major problem that the company has been witnessing is dealing with the black market marijuana. “The unlicensed market continues to flourish, due in part to the competitive financial advantage such operations have over legal cannabis businesses,” California’s cannabis officials wrote in a report published last year.

Dealing with such scenarios, MedMen is working hard enough to entice customers to cover its bottom line. The hard hitting reality comes to surface that the “new” cannabis consumers are not those with high income or those who are spendthrift but those who have lower incomes. It seems that it’s high time that the cannabis industry should start marketing to the stoners.

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

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