Cannabis retail brand MedMen posted its fourth quarter and fiscal year financial results on Thursday, posting revenues of $20.6 million and $39.8 million respectively. The sales came on top of significant losses. However, that has the company considering corporate measures to bridge the gap and continue to stay afloat.
At MedMen’s fourth quarter and first-ever conference call on Thursday, executives outlined a plan to upsell consumers and negotiate wholesale prices with distributors, ideas more closely aligned to a Walmart business plan than that of a marijuana firm.
“Since becoming a public company in May of this year, we’ve been singularly focused on our vision to mainstream marijuana and I’m proud to say that our hard work and the significant investments we’ve made in building our operating platform and team are paying off,” said MedMen CEO and co-founder Adam Bierman in a statement.
Branding comes at a price
MedMen’s push to corner the market and create a brand recognition campaign over the past year cost the company vast sums of money. Looking to differentiate themselves as a high-end cannabis retailer while also remaking the stoner stereotype, MedMen racked up losses to the tune of $78.7 million, in comparison to $7.35 million during the same period last year.
For the fiscal year, those losses are even steeper, climbing to $112.3 million while expenses rose to over $110 million.
Along with the company’s advertising push, they’ve gone all-in on the high-end retail angle with posh brick-and-mortar stores in Los Angeles, Las Vegas, and on Fifth Avenue in Manhattan. Although consumers continue to purchase more and more products online, MedMen executives insist that retail stores are crucial to their long-term success.
"Retail is the control point of our nascent industry," Bierman said during the conference call on Thursday. "It is where new consumers experience cannabis products and where brands are built. It is also where customer loyalty is built."
MedMen launched a new high-end product, currently only available in Las Vegas, called Statemade. And like their stores, it comes with all the trappings of high-end retail, including glitzy packaging and a designed-by-committee naming scheme.
PharmaCann can change the game
The company is touting its planned $682 million all-stock acquisition of PharmaCann, a move that would not only expand their reach to 12 states but also sent stock prices soaring up 28 percent when the deal was announced earlier this month. More importantly, as some experts note, the deal actually makes MedMen a national chain.
In other words, MedMen needs PharmaCann because, without them, they just lost $100 million on a national branding campaign despite the fact that they only have retail locations accessible to roughly 10 percent of the American population. PharmaCann justifies all of that spending.
“2018 is a year of many milestones, including the pending PharmaCann acquisition; closed and pending expansions to Northern California, Illinois, Arizona and Florida; successes in accessing the capital markets; and the launch of our suite of [statemade] products and brand strategy,” continued Bierman in his statement. “With our strengthened Board of Directors and management team, diverse asset base and strong balance sheet, we believe we are well positioned to capture the future potential of the evolving cannabis industry.”