Deep Dive: Medicine Man Technologies lays the groundwork for long-term profitability

Download the full Deep Dive on Medicine Man Technologies here.

Medicine Man Technologies (OTC: MDCL) provides a case study for building an intelligent, long-term cannabis strategy. By vertically integrating profitable operators in Colorado through several recently announced acquisitions and using capital and corporate integration experience from a large partner/investor to expand sales and margins, they are building sustainability.

In short, MDCL is the exact opposite of many other cannabis companies beset by red flags for investors: management turnover, huge cash-flow losses, unfunded business plans, overly ambitious strategies and complex capital structures.

Many cannabis companies promised the world, raised a lot of capital and promptly burned most of it assuming they could raise more. Now, faced with tight capital markets, many are scaling back operations.

We at Investor Intelligence believe the best investment opportunities have similar elements:

  1. Quality fiduciaries: high-quality management teams aligned with shareholder interests.
  2. Sustainable and profitable business model.
  3. Sound strategy.
  4. Adequate capital to fully execute the strategy.

The best investments have identifiable catalysts investors can use to judge management’s progress versus the stated business plan, with the ultimate goal of creating shareholder value over time.

Medicine Man has the high-quality fiduciaries, the profitable business model, the sound strategy and identifiable catalysts. The company has a lot of cash on the balance sheet, but it still needs to raise more cash to close the acquisitions.

We expect MDCL will be able to issue debt thanks to its significant EBITDA.

The structures of their recent acquisitions align the incentives of the new MDCL management team and its shareholders. Once the acquired firms in Colorado are integrated, we believe management can repeat this growth strategy in multiple other states.

Read more about MDCL’s strategy, management, capital structure, valuation and potential in our in depth report here.