Cannabis Hits Fifth Avenue
Fifth Avenue, is New York’s premier thoroughfare. It is considered one of the most expensive and glamorous streets in the world. Major global luxury brands have their flagship stores on this avenue. So for a cannabis dispensary to have a presence on Fifth Avenue only says one thing; a seismic shift is happening in the way marijuana is branded and sold to the public.
Through a reverse takeover, MedMen bought a public shell company in Canada and then merged with it to enable MedMen to get listed on the Canadian Securities Exchange (CSE) under the ticker MMEN. US marijuana companies are currently barred from listing on NYSE or Nasdaq. So by listing on the CSE, people living in the US can buy and sell stock in a company whose product, marijuana is still illegal under federal law.
But while federal law is still backwards looking in its approach to marijuana’s legal status, states are waking up to the realization that popular sentiment for the legalization of marijuana has been growing. In fact, a pew research conducted in October 2017 found that 61% of Americans or about six in ten favored its legalization.
On July 13, 2018, New York State Department of Health issued a report recommending the legalization of marijuana. They found that the positive effects of a regulated marijuana market in NYS outweighed any potential negative impacts. It therefore seems to be only a matter of time before NYS joins the ever growing list of states that are legalizing marijuana. And then maybe even Federal Law will follow this trend and overhaul their outdated and repressive laws.
State sanctioned cannabis sales in the US are estimated at about US$7 billion annually and according to the Cowen Group, are expected to reach US$75 billion by 2030. MMEN has positioned itself to tap into this burgeoning market. It has more than 800 employees and 18 licensed facilities in California, Nevada and New York. It has branded cannabis as a consumer product. And by opening its store on Fifth Avenue, is positioning itself as a trendy designer dispensary. The Fifth Avenue store has come to be known in some circles as the “Barneys of Weed”. The company says, “we do not run pot shops, we manage leading retail stores that happen to sell marijuana and marijuana products.”
My approach to analysis of a company’s security is technical. Since MMEN was only listed on May 29, 2018, there is insufficient data to do a proper analysis of this company’s stock price. After opening at 5.63 on May 29, 2018, price declined to a low of 3.43 on June 8, 2018. This is not an unusual occurrence for a newly listed company. A rebound saw price rising to a high of 5.90 on June 21, 2018, but since then it has traded sideways, closing on August 2, 2018 at 4.21.
This piece is for information and educational purposes only. I am not recommending you take a position in this stock. If you are interested you must do your own research and make a decision accordingly.
Written by Stella Osoba, CMT