The situation with the cannabis industry has been pretty tough for much of the year so far, and many of the most promising stocks have come down from their record highs. One of the biggest losers in the market has been MedMen stock, and in 2019 so far, MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) has managed to lose as much as 88% in its value.
About MedMen Enterprises
MedMen Enterprises was established following a reverse takeover, and almost immediately, MedMen expanded by beginning the process of taking over PharmaCann. The acquisition doubled its retail presence to 12 states from six states.
The company’s business in California grew at a fast clip, and everything seemed to be going in the right direction. However, one of the biggest problems for MedMen has been considerable tax rates in its most important market, and in addition to that, the black market has continued to thrive.
On the other hand, the expansion into Florida and Arizona resulted in losses to the tune of $231.7 million in the last year for MedMen. Moreover, the cash issues also forced the company to cancel the acquisition of PharmaCann.
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At the time of writing, MedMen stock is up by 2% at $0.39 USD. The stock made a new low of $0.36 earlier this week.
Shortage of Cash
It is quite clear that the company is in a bit of trouble due to the market situation at this point and also because of its out-of-control expenses. The company would have run out of cash had it not been able to get $280 million from Gotham Green Partners. That got the company some breathing space, but it is now down to only $34 million in cash.
Considering the current situation in the cannabis sector, it has now becoming increasingly difficult to raise capital for companies, and MedMen Enterprises is going to find it tougher than others. In addition to that, MedMen’s management compensation has also been a major issue for many investors and experts feel that it would be wise for investors to stay away from MedMen stock at this point in time.
What do you think?
Featured image: Canva
