MedBox Attempts to Assuage Shareholders After Critical Report on Founder, Company

MedBox Inc. has deemed a recent investigative report about the company’s founder as “reckless” and “deceptive,” adding that negative press is an inevitable downside of success and increased exposure.

The company issued the comments – and offered new financial guidance – in a letter to shareholders, hoping to stem any damage resulting from the report. The article may have spooked some investors: MedBox shares have fallen more than 20% since the story was published Sept. 30 (although big movements in either direction are common for the company’s stock and public MMJ firms in general).

The controversial piece, written by the Southern Investigative Reporting Foundation, paints a damning picture of Vincent Mehdizadeh, who founded MedBox and now serves as its chief operations officer. It details a host of legal, tax and financial issues Mehdizadeh allegedly faced in the past. The report also questions MedBox’s financial health, auditing and accounting methods, and overall history.

But Mehdizadeh claims the article is full of half-truths, blatant errors and even complete fabrications. He said, for instance, that he was never charged with solicitation of a prostitute, credit card fraud and trespass with intent to injure as detailed in the article. Mehdizadeh also claims that the reporter has ties to people shorting MedBox stock.

As a result, Mehdizadeh said he is pursuing legal action against the reporter and the publication, though not with company funds.

“All my past issues were non-jail offenses, which are eligible for mandatory deletion from my record upon completion of probation in June 2016,” he told MMJ Business Daily. “Leaders inspire unwarranted hatred sometimes. It’s unavoidable. We do our best in the leadership role that was bestowed on us by always trying to be the most viable public company in the sector.”

In a bid to reassure investors of its financial health and prospects, MedBox issued upbeat financial guidance, saying it will report record revenue in the third quarter and expects $6 million in revenues for the year – nearly double its 2012 sales figure. The company also said it will revise second-quarter revenues upward.

At the same time, MedBox said it is lining up new clients in a handful of medical cannabis states and in Canada. It’s also helping dispensary/cultivation applicants in Connecticut and Massachusetts. MedBox is reportedly working with roughly 10% of all applicants in Massachusetts, though some MMJ entrepreneurs are upset with the company’s heavy involvement there.

MedBox shares are hovering around $21, down from $27 just before the investigative report was published. The recent dip is part of a larger slide: The company’s stock is down 65% this year, in part because of profit concerns and ongoing challenges tied to high accounts receivables.

Still, Mehdizadeh said he is pleased with the share price – the highest of all MMJ stocks by a wide margin (most trade for mere pennies).

“We are absolutely thrilled the market has that much support for our stock,” he said. “We are happy to be in the $20s…why wouldn’t we be?”

Daily News | Marijuana Stocks & Public Companies

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note: Comments are moderated by our editors who do their best to approve comments ASAP. As Marijuana Business Daily is focused on business, we approve comments that are specifically relevant to industry professionals. General opinions and questions about cannabis may not be posted.