May 23, 2013

MedBox Profits Halved Despite Healthy Increase in Revenues, Growth of Medical Cannabis Industry


MedBox Inc., which provides automated cannabis vending systems and consulting services to the medical marijuana industry, saw its first-quarter net income fall 56% as increased marketing, commissions and other expenses outpaced revenue growth.

The California-based company reported $272,018 in profits for the first three month of the year, down 56% from $622,150 during the same period in 2012, according to its latest financial report.

Revenue rose to $1.75 million vs. $1.46 million in the year-ago period. The 20% sales increase shows growing demand for the company’s products and services, which bodes well for the future of MedBox as the medical marijuana industry continues to expand. But it wasn’t enough to offset a big increase in costs during the first quarter.

Expenses hit $1.3 million – nearly triple the level a year earlier. Medbox spent $293,595 in marketing and advertising in the first quarter, up significantly from about $38,000 over a year earlier. Commissions totaled $50,000 vs. none in the year-ago period, while legal and accounting fees rose nearly 10-fold to hit $316,953. Increases in construction/buildouts, outside services and salaries also contributed to the spike in expenses.

“We are pleased with our progress to date, but we recognize that we are still in our early growth stage,” Bruce Bedrick, chief executive officer of Medbox, said in a press release announcing the earnings. “We are moving forward with a sensible growth plan that includes realistic forecasts of equipment sales, strategic acquisitions, consulting fees and our new financing division.”

The company could not be reached for additional comment on its financials but said in the release that it is poised to enter new markets quickly.

Several states could legalize medical marijuana in the next couple weeks. Illinois lawmakers recently approved a bill that would allow up to 60 dispensaries statewide, and the governor will now decide whether to give it the green light. New York is also considering legalizing medical marijuana, while lawmakers in Nevada are weighing a measure that would provide for dispensaries (the state already has medical marijuana laws on the books but doesn’t allow MMJ centers).

“We have a team of consultants ready to be on the ground in Illinois, Nevada and New York to provide education and guidance on how to operate fully compliant, safe and secure medical marijuana facilities that are transparent in operation and provide accurate, unalterable reporting for taxation and auditing,” Bedrick said in the release. “We anticipate providing a leadership role in those states as they unroll their programs, just as we have been in other states that have approved sensible and effective medical marijuana laws.”

Aside from these potential opportunities, MedBox said it has  inked $1.5 million in contracts that were not recorded in the first quarter because they have not yet commenced. These contracts are the result of the company’s move to offer in-house financing for its technology, which should further boost sales going forward.

From a cash perspective, the company has $1.04 million in reserves vs. $125,533 a year ago, largely the result of a recent stock offering that raised $1.25 million. Its cash balance is also up slightly from $1.03 million at the end of last year.

MedBox shares saw a slight bump after earnings were released yesterday, rising 66 cents – or 2.4% – to close at $28.65. The stock often experiences bigger fluctuations on a day-to-day basis, in part because of the relatively low number of shares on the market. At one point last fall, for instance, its shares rose from $4 to more than $200 in less than a week before losing most of those gains the next day.

The relatively modest movement since earnings were released indicates that investors are neither thrilled nor extremely disappointed in the results. Its shares, which trade on the over-the-counter market under the symbol MDBX, are hovering around $28.50 today.

MedBox has filed forms – including audited financials for the past two years – to become a fully reporting company with the US Securities and Exchange Commission, which should help boost its credibility with investors by offering more transparency.

One Comment:

  1. What’s really going on in San Diego?

Post Your Comment:

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.

Nevada Dispensary Considers Lawsuit Over Delays

A dispensary in Nevada that has been hoping to open since February is considering filing [click to continue...]

WA Cannabis Shops Busted for Selling to Minors

Nineteen Washington State marijuana stores face suspensions and fines after they failed to properly check [click to continue...]

Dispensary Bill on Tap in Michigan

Michigan medical cannabis issues, pot dispensary updates, news about marijuana by state

Concerned with what might happen if voters legalize recreational marijuana at the ballot next year, [click to continue...]

CDC Calls for Strict Edibles Labeling, Public Education

After evaluating a fatal accident that took place last year in Denver, the Center for [click to continue...]

Israel to Sell Medical Marijuana in Pharmacies

Israel, one of the world’s leading countries on medical cannabis research, will soon be dispensing [click to continue...]

Third Minnesota Dispensary Opens Despite Low Patient Count

Photo of open sign

Minnesota’s third medical cannabis dispensary has opened despite the low number of patients registered to [click to continue...]

Police Raid Business Owned By CA Industry Association Exec

A business run by the president of the California Cannabis Industry Association was raided and [click to continue...]

Illinois Poised to Begin Seed-to-Sale Tracking

As Illinois’ medical marijuana industry ramps up, regulatory officials are preparing to start following medical [click to continue...]

Washington State Dispensaries to Benefit From PTSD Addition

marijuana conditions

A week after Colorado shot down an attempt to add post-traumatic stress disorder as a [click to continue...]

MMJ Patient Boom in Rhode Island

Rhode Island’s three medical cannabis dispensaries must be pleased: In the past two and a [click to continue...]

Canadian PM Candidate Wants Legal Dispensaries

Justin Trudeau, a candidate for prime minister of Canada, came to the defense of dispensaries [click to continue...]

Inspector Turnover Could Delay Nevada Dispensaries

dispensary delays

Hurry up and wait. That appears to be the situation for medical marijuana businesses in [click to continue...]

California Report Calls for Strong Regulations on Legal Marijuana

A working group overseen by California’s lieutenant governor has issued a report outlining 58 policy [click to continue...]

Florida Medical Cannabis Campaign Takes Step Forward

United for Care, which was behind the failed 2014 campaign to legalize medical cannabis in [click to continue...]

Marijuana Business Daily