The press release sounds promising: Medical Marijuana Inc, a publicly traded firm that invests in and purchases hemp and cannabis companies, saw revenues double in the fourth quarter of 2011 over the previous three-month period.
The company, it seems, is doing well financially despite the government’s moves to shut down hundreds of medical pot shops and marijuana businesses from California to Colorado. This year appears bright for Medical Marijuana Inc., too, particularly when considering that Arizona is now set to move forward with its dispensary licensing program, which will create a huge new medical pot market.
But the reality might be much different.
Medical Marijuana Inc. apparently is facing a cash crunch. According to one report, the company’s coffers are so low that it “does not have sufficient capital available to fund operations, nor to fund any expansion.” In other words, its revenues – while growing – are not covering expenses, meaning it is losing money. At about 3 cents a share, its stock can’t get much lower, showing that investors aren’t exactly thrilled with its prospects.
The company’s struggles reflect the tough environment for all medical cannabis businesses at this point in time. Many MMJ companies are fighting for their survival, so even making it to the next day is considered a victory.
Medical Marijuana Inc.’s story provides some lessons for other MMJ business owners. The company has had to change its focus and overhaul its business model several times as the industry has changed. It initially started off providing educational seminars on medical marijuana and software for dispensary businesses. It now has a portfolio of subsidiaries and divisions that focus on everything from hemp bio-fuel to hydroponics.
That flexibility has allowed it to survive, even though it is navigating through some turbulence now. As Medical Marijuana Inc. shows, the ability to change is perhaps the most important factor for any MMJ business right now.
The company’s ultimate success is important for MMJ, as a strong, publicly traded company helps bring legitimacy to a fledgling and controversial industry. If the company can pull through these tough times, it could help benefit the entire sector.