Cannabis dispensing technology provider MedBox Inc. has impressive plans for immediate growth, which could help the company’s stock hit new heights. But the checkered past of its founder, coupled with concerns over the firm’s financial health, serve as red flags for some in the investment community.
In a recent in-depth piece on the company by The Phoenix New Times, MedBox founder Vincent Mehdizadeh said the firm has contracts totaling $20 million in the works and that it has received pre-orders for 200 vending machines in Washington, Illinois, California and Nevada.
The company has also formed new subsidiaries in banking, cannabis concentrates and security systems, and it has partnered with a firm to manufacture vaporizers.
MedBox, however, is still “bleeding cash,” said investment adviser Stephen Barnes, who also pointed to CEO Bruce Bedrick’s recent sale of 60,000 shares as a reason to stay away from the stock.
“It shares characteristics of previous companies that have been failures,” Barnes said. “It has a ridiculous valuation.”
MedBox recorded $5.2 million in revenues for 2013 but did not turn a profit.
The checkered past of MedBox’s executives could also hurt its future, Barnes said. Mehdizadeh last year pleaded guilty on two counts of grand theft. Authorities allege that Mehdizadeh and his father stole thousands of dollars from immigrants seeking green cards by promising loans and bankruptcy help.
Mehdizadeh paid $450,000 in the settlement. He recently told Marijuana Business Daily that the charges are non-jail offenses that are eligible for deletion from his record upon completion of his probation in 2016.
Correction: The initial version of this story said that Mehdizadeh was sued by 47 different parties. Those were general complaints to local officials, not lawsuits.