MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) released unaudited financial results for its fiscal 2019 second quarter ending December 29, 2018. Across the company’s operations in California, Nevada, New York, and Arizona, systemwide revenue increased 40% sequentially to $29.9 million. The company said that if it included pending acquisitions that revenue number would be $49.5 million. Official results will be posted in February.
The growth is mostly due to the company’s stores in Southern California. MedMen has eight retail locations there that reported a combined $23.7 million in revenue, which represents a 27% quarter-over-quarter increase. Cowen & Co.’s most recent estimate projects California will be a US$11 billion market by the end of 2030.
“California is the prize of the cannabis industry and the performance of our stores, quarter-over-quarter, is a reflection of our continued execution in our home state,” said Adam Bierman, MedMen chief executive officer, and co-founder.
West Hollywood Store
Unfortunately, MedMen did not receive a permanent license for its West Hollywood location. This information was divulged in a recent lawsuit filed against MedMen that alleged the company was being mismanaged. This early release of revenue results may be an attempt to fight back against those allegations. In other words, if revenue has jumped 40% quarter-over-quarter how can the company be mismanaged?
The city council of West Hollywood debated their own wisdom of awarding licenses to businesses that had no open stores and no assurance they could open stores quickly.
Mayor Pro Tem John D’Amicosaid in a public meeting, “We haven’t asked the eight new licensees whether they can open a business in three months in the city, whether or not they’re in the position to do that – that was supposed to be explained. We also don’t know what the other four medical cannabis licenses mean if the state has conflated cannabis and adult use licenses, and that was supposed to be brought to our attention when I suggested we table this. So we’re having a discussion without any of the actual information we need. Except that four really great businesses in our community potentially will be asked to stop serving their constituents, their customers, if they don’t get some way to continue to provide service.”
That sounds like the city leaders are having second thoughts.
Other MedMen Retail Locations
The retail revenue numbers including those pending acquisitions are based on 31 retail stores that were operational at the end of the quarter. The company said that includes the MedMen Paradise location near McCarran International Airport in Las Vegas, which opened in October, and the MedMen Scottsdale location in Arizona, which opened in December through the closing of the Monarch acquisition. The operational retail locations, including pending acquisitions, represent 40% of the 77 total stores that the company is licensed for across 12 states.
In addition to growing revenue at its existing locations,MedMen has 16 new locations slated to open during the calendar year 2019, including 12 locations in Florida, where the Company is licensed for up to 30 locations. The Company is set to open four retail stores in Florida in the next 90 days, which include locations in Miami Beach, Orlando, West Palm Beach, and Key West.