MedMen stock continues to fall on Friday despite MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) announcing its Florida expansion. The company opened its first retail location in West Palm Beach
MedMen Enterprises has been among the top popular companies in the cannabis industry, and one of the most important things the company has done is that it has largely concentrated on the lucrative Florida cannabis market to fuel its expansion.
In a new development, MedMen has further consolidated its expansion in the sunshine state by opening a retail location at West Palm Beach, and, needless to say, it is a significant development. However, that is not all. The company has also stated that it is going to open two more retail outlets in Orlando and Key West.
Florida is one of the most populous states in the United States and remains one of the most lucrative markets for cannabis companies, due to the presence of as many as 200,000 qualified patients and counting. The Chief Executive Officer of MedMen, Adam Bierman, stated, “MedMen looks forward to serving Florida’s medical marijuana patients with a consistent, professional and elevated dispensary experience that is the hallmark of MedMen retail.”
MedMen stock is trading lower by 3% and now selling at $2.08 on the OTC market. On the Canadian side, MMEN stock is down 3.50% at $2.78.
However, there are some major worries that MedMen Enterprises will have to contend with despite its expansion in Florida and that pertains to its cash crunch. The speed at which the company made acquisitions and raised the general costs of business has been a niggling worry for analysts for some time.
Many believe that the company might be on its last legs as far as its cash crunch is concerned and the sources of funding are fast disappearing. In other words, the cash burn that has funded the company’s expansion is fast becoming unsustainable. In the period that ended on March 30 this year, the company recorded revenues of $36.6. million and gross profit post adjustments came in at $15.53 million. However, 25% of the gross profits went into administrative costs, and total expenses hit a staggering $72.9 million.
For a company to have expenses that are double the revenues is a recipe for disaster, and it is not really a surprise that the cash burn is now being regarded as a mortal danger for the company.
MedMen stock has slumped over 60% already in 2019 and recently made a new 52-week low.
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