MedMen: Blowing Away the Purple Haze

By Shadd Dales On Apr 20, 2022

MedMen is an MSO with incredible value on the public markets.
Retail operations have class and cash flow.
Earnings will sustain Medmen moving forward.
Risks are apparent but value is there to be had.

Background

Medmen is a major cannabis MSO with large luxury retail stores. Currently, the company has been profitable and expanding rapidly. However, there has been little analyst attention to the stock. Even with the massive scale the has been operating on. It’s time to put MedMen under the spotlight.

Retail Operations Generate Pure Cash

The company has been rapidly expanding with its dispensaries in New York City and other partnerships. The one focus MedMen has across its stores is Luxury. This can be visibly seen throughout the locations with sections and different staff for each product line. They focus on the experience of the customer before their own bottom line. In the past, that has led to problems but now with a more accommodating federal system, MedMen has been able to carve out its niche. With 22 retail licenses and expansions out into a new state, there is a bright future for MedMen. Strategically planning out dispensary locations in key markets has garnered much of the company’s recent success. The numbers have been looking great with 600k total retail visits in FY 2022 and 250K average monthly visitors to MedMen.com. These numbers have translated into sales with $40 Million in revenue and 7 Million in earnings for Q1 22. Looking specifically at MedMen’s macro picture the company has been dealing with a variety of tailwinds. Recent political events have been triggering cannabis reform to potentially be in place by this fall. This will immediately give MedMen a major market boost as their products will be available to more eyeballs.

Earnings Give The Company A Base To Stand On

Profitability has been a major concern of Medmen for some time. With the established base of operations and 5 consecutive quarters of free cash flow, MedMen only stands to benefit from further cannabis reform. While this is a nicety on the surface there is one small problem with MedMen. They are not vertically integrated at a scale to protect the product lines in all 22 licensed areas. This could be a major issue down the line as consumers satisfaction is a major area of concern for any emerging retail enterprise. Even though MedMen operates on the retail front they have the size and luxury to generate a variety of clientele. Anywhere from rational medical patients to recreational users.

Risks Are Apparent Due To The Market And Sector

As with any cannabis company there a variety of risks. However, as the regulatory issue becomes cleared out, retail will be ample opportunity to expand throughout the US. With an existing infrastructure to attract institutional, investors the cannabis sector as. The whole look bright. Individually Medmen stands out to me due to its mission. They want to serve a dedicated sophisticated audience. This should resonate with every cannabis investor because this is a new space with many players and MedMen is the best representation of what cannabis should look like in the eyes of many.