MedMen stock is continuing to tank in the aftermath of posting its quarterly results, which saw net loss more than double. Can MedMen Enterprises' (CSE:MMEN) (OTCQX:MMNFF) push for recreational cannabis legislation in Flordia turn the fortunes of this pot stock around?
The Earnings Disappointment
Looking at MedMen's earnings as a whole, Q4 fiscal 2019 technically wasn't a terrible quarter for the US pot firm. Revenue of $42 million USD was a year-over-year increase of 104%, while the full-year figure of $130 million USD was a huge gain of 227% from 2018. However, MedMen stock tanked under the pressure of a net loss of $82.9 million USD for the quarter and $277 million USD for the year, well over double the loss poted in fiscal 2018.
MedMen Stock Hits Year-Low
The substantial loss piled more misery on MedMen stock, which has dropped over 70% since the beginning of the year. Last month's announcement that the company was pulling out of a deal to acquire private cannabis firm PharmaCann pushed the stock to a 52-week low, with the company blaming “changing macroeconomic conditions” for its decision to withdraw from the deal, highlighting the struggles of pot stocks in both the US and Canada.
The Case for Florida Legislation?
MedMen Enterprises has been aggressively expanding into several states where cannabis is legal for recreational use, in particular, California and Nevada, where it has launched a cannabis delivery service. However, the state where MedMen has sought to expand its operations the most is Florida, where cannabis is only legal for medical purposes.
Florida is the third-largest state in the US and has over 260,000 qualified patients and an even more substantial market for recreational use. While the opening of several dispensaries in the Sunshine State in recent months has provided some optimism for MedMen stock, the company appears to be banking on recreational legalization in Florida to drive real, sustainable gains going forward.
MedMen Enterprises is a leading member of the Make it Legal Florida campaign, a group of pot firms pushing for recreational cannabis in Florida. The group is pushing for a 2020 ballot initiative to pass an adult-use cannabis amendment and raised another $1.08 million USD last month. The group currently has over 100,000 petition signatures as of early October but needs 766,200 to make the ballot. While there is undoubtedly a strong demand for recreational pot in Florida, it still looks like a bit of a pipe dream for now. MedMen shares are currently trading for just $1.
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