MedMen Enterprises Inc (MMEN)

[JohnCM]

Did MedMen Just Make A Key Hire To Build A Competitor To Eaze?


July 17, 2018

In late May, MedMen Enterprises Inc. (MMEN.CN) (MMNFF) completed a successful IPO on the Canadian Stock Exchange (CSE) and was immediately under pressure.

Although MedMen is a leading cultivator, producer and retailer of state-sanctioned cannabis in the United States, the shares were under pressure due to the company’s lavish management compensation packages (specifically the CEO and Chairman) and the structure of the deal.

Two days after MedMen started trading on the CSE, the shares had fallen almost 40% from the opening price on the day of IPO and were extremely oversold. This plunge created a great opportunity for new and existing investors and the shares came storming back.

MedMen rallied approx. 65% off these lows before finding resistance and we are monitoring the decline. Today, we have issued an update on the company following the recent developments.

Announces Key Additions to the Management Team

Today, MedMen announced two significant additions to the management team. The company appointed David Dancer as Chief Marketing Officer. He is a veteran marketing executive with more than 25 years of experience leading brands such as Teleflora, Charles Schwab, Visa and American Express.

MedMen also announced that Mike Lane would serve as Chief Digital Officer. He was the vice president of product at Grindr and brings 20+ years of experience leading design and development of digital customer experiences at major brands like Live Nation, Ticketmaster, FOX Broadcasting and Adobe.

These additions lead us to believe that MedMen is focused on developing and launching a marijuana delivery app to compete with Eaze. This type of project would significantly benefit MedMen’s top line as it would create a new revenue stream for the business. When looking at MedMen’s business, this seems like the obvious next step and we will continue to monitor how the team executes.

MedMen Drops on Equity Guru’s Article

Yesterday, MedMen recorded a double-digit percentage decline on heavy volume after Equity Guru released a scathing article about the company. The article said that the company has been taking tips away from its employees. According to the story, numerous MedMen employees were told by management that their bi-weekly pay would be subjected to a deduction based on the customer gratuities that had been passed through the stores electronic payment systems.

This is a tough situation and not a good way to treat employees. We do not think this type of practice could cause any issues with the IRS or the state of California, and will continue to monitor the situation.

A Leading United States Cannabis Company

With 18 licensed facilities in California, Nevada and New York, MedMen is a leader in the cannabis industry. In June, the company announced the acquisition of Florida’s Treadwell Nursery, with state licensing for 25 stores, and expect to hear some updates on this emerging market soon.

MedMen currently operates 13 stores in marquee locations such as New York’s Fifth Avenue, Beverly Hills and Los Angeles’ Abbot Kinney district. MedMen’s first branded store in Downtown Las Vegas is scheduled to open this week, and the company has a joint venture agreement with Canada’s Cronos Group to open stores in that country under its new adult-use program.

MedMen has fallen more than 20% from its late June highs and we are monitoring the recent decline. We consider MedMen to be a leading United States cannabis retailer and this is a stock that investors need to keep an eye on.