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.
The two companies selected to grow and dispense medical cannabis in Minnesota have raised a [click to continue...]
Medical marijuana businesses in Vancouver, British Columbia, may soon be in the city’s crosshairs. The [click to continue...]
An increasing number of states are requiring cannabis companies to track every plant from seed [click to continue...]
The agency in charge of overseeing Oregon’s recreational marijuana industry is planning to add a [click to continue...]
Cannabis business owners harassed by federal prosecutors despite operating legally in their respective states would [click to continue...]
An attempt to legalize medical marijuana in Florida this year via the state Legislature is [click to continue...]
An Ohio organization pushing for medical marijuana legalization in the state says a stronger, more [click to continue...]
A dispensary run by the president of the California Cannabis Industry Association has come under [click to continue...]
Oregon officials in charge of regulating the state’s up-and-coming recreational marijuana industry expect roughly 2,000 [click to continue...]
One of the first commercial cannabis testing labs in the United States is seeking $5 [click to continue...]
The head of the Drug Enforcement Agency will resign next month, prompting cheers from cannabis [click to continue...]
The owners of a planned Las Vegas dispensary held a ceremonial groundbreaking on Monday despite [click to continue...]
Yet another national poll has revealed that attitudes towards legalizing cannabis have grown more tolerant [click to continue...]
Washington State cultivators must be hurting. The average price of a gram of retail cannabis [click to continue...]