MedMen Enterprises Discusses IPO & Retail Stores (Video)
MedMen Enterprises (CNSX:MMEN) (OTCMKTS:MMNNFF) Managing Director for Investor Relations Vahan Ajamian talks to James about the recent buzz surrounding the company’s recent IPO. Vahan also goes into the retail experience and MedMen’s value proposition.
James West: Hey! Welcome back to Midas Letter Live. My guest this segment is Vahan Ajamian and he is the Managing Director of Analyst Relations for MedMen, which just went public today on the CSE under the symbol MMEN.
Vahan thanks for joining me today.
Vahan Ajamian: Thank you so much for having me.
James West: Vahan, you were two weeks ago an analyst with Beacon Securities .
Vahan Ajamian: Exactly! Just switched jerseys over the LIFT conference last week. It’s pretty exciting.
James West: Amazing the impact this industry is having on our industries generally. MedMen is probably one of the most anticipated IPOs of the year because of their presence in the U.S market. Why don’t you tell me what it is about the MedMen brand that makes people flock to their stores.
Vahan Ajamian: Sure, so our tagline is “mainstreaming marijuana”. Right now we’re seeing an industry, a very large industry that’s migrating from the illegal market to the legal market. One of the multi-million dollar campaigns we just had is called Forget Stoner. We’re not out there appealing to the stoner market. We’re trying to really mainstream marijuana.
You walk into the stores and you’re not going to see a big armed guy, a security guard with a gun, as soon as you walk in, you’re not going to see weird psychedelic stuff on the walls, have a less then favorable experience with the bud tender. You walk in it’s nice, it’s bright, it’s sleek. You have customer servers that are friendly, that are educated in the product. We really want to appeal and we are appealing not just to the stoner market but to really mainstream; the white- collar professionals, the soccer moms, people who are elderly having trouble sleeping. They don’t want to buy products from a guy on the corner in a zip lock bag.
James West: Sure
Vahan Ajamian: They want to walk in and get fully informed about the product.
James West: Yeah
Vahan Ajamian: So I think when people walk into the MedMen stores they have a really good experience. It keeps them coming back and generating a brand.
James West: I’ve heard because I haven’t been to a MedMen store yet, but I plan to go at my earliest opportunity. I’ve heard them compared to Apple stores in the way that they’re laid out, bright and ultra-modern; very clean, fresh and well-spaced and everything.
Vahan Ajamian: Yeah, we’ll take that analogy.
James West: Sure (Laughter)
Vahan Ajamian: You’ve got good wood paneling. The staff is all wearing MedMen shirts. They’re all very presentable, very knowledgeable and then when you walk in; so they’ll be certain stations for dried flower then there’s an edible station and vape station. Every three or four strains you’ll have an iPad; speaking of apple, what the strains are and what the potency is, THC, CBD, where it’s made, what the pesticide etc. content is, whose verified it doesn’t have anything that’s not allowed and what it can be used for; rather you need help sleeping, rather you want something that gives you more energy, less energy, what time of user it might kind of attract.
Really give that information and time to have an overall positive experience for our customers
James West: Sure. The founding of the company happened about eight years ago by two gentlemen Adam Bierman and Andrew Modlin is it?
Vahan Ajamian: Correct.
James West: Okay so they, did they, is the inspiration for the name MedMen, I’m just curious about this, is it from Mad Men, the wildly popular show?
Vahan Ajamian: No, it’s actually their names if you put it together right. BierMAN, MODlin. They slightly changed it overtime to becoming MedMan.
James West: I get it! It’s a cool name. I’m interested in knowing what drove them to go public in Canada? Except for the obvious it’s federally prohibited in the United States. But, we’ve seen John [00:03:43] I think it was table of legislation, Chuck Schumer table of legislation to move towards federal legalization. It’s interesting to me that they would prefer to go public in Canada sooner rather than wait for that federal ball to you know cross the net.
Vahan Ajamian: Sure, so the company started off having a few different funds; a few venture funds. Fund one, you raise money, you deploy it and open fund two, you raise money and you deploy it. It got to a point we’re seeing the tailwinds in the industry, more and more states going online. There’s more and more applications that have to be in. More and more expansion to be funded and the CSE issued the best place to go public. You can really tap into a wider variety of capital out there and start to move faster.
That was the key components of why we decided to list on the CSE.
James West: Well that’s interesting. They were able to look at their portfolio of assets and say let’s run those three and get rid of the rest and away you go.
Vahan Ajamian: Exactly. There’s so much more happening in the U.S that we want to get ready for and rather than starting each fund one at a time, it’s easier just to go public. Now you have a currency as well you can use for emanating opportunities as they arise. But if you were to tell me three years ago that a U.S cannabis company is going to be listing in Canadian Exchange, you think what are you talking about. Here we are though and shows how fast the industry is moving.
James West: Right, right. What is the build-out plan in the States? There’s how many stores now?
Vahan Ajamian: We have 18 facilities. A few cultivation facilities in the States as well as stores.
James West: Nevada, California, New York.
Vahan Ajamian: New York. Exactly. So, if you look at the foot print we’re in right now; Los Angeles, Las Vegas, New York specifically Manhattan right on Fifth Avenue. These are the three key locations that I think we want to start with. This is where pop-culture is created. This is where brands are created and then backfill across the country and obviously export internationally.
James West: Sure.
Vahan Ajamian: Now that we’re public we want to make sure we can execute on the footprint we have, build out what we need and obviously we’re looking at other favorable States that are coming online. You see more and more coming online recreationally and medically that are attractive.
James West: Sure. When do you think that federal de-prohibition for recreational access as well as medical is likely to happen?
Vahan Ajamian: It’s tough to pinpoint an exact date. I think the key point I take away is even in Canada as well as the U.S legalization isn’t a date, it’s a process. California has been medically legal for well over ten years and just went recreationally legal January first of this year. Nevada went July of last year, so less than a year. We’re seeing the dominos are all falling one by one by the States right. On the federal level there’s a lot of momentum as well.
We have a number of Senators, Chuck Schumer as you mentioned, putting in a bill to de-criminalize marijuana. We do know that President Trump is working with Senator Cory Gardner in Colorado to present a bill to entrench in law the state’s ability to legalize medical and/or recreational cannabis.
We’re seeing the positive momentum and I think both nationally and the States at local levels. What we want to do is make sure while we’re in the land grab part of this phases in this industry, we go out there and get some really good assets if and when that happens it should be worth more.
James West: Yeah, that makes perfect sense. Is there a plan to build stores in Canada if it goes legal here?
Vahan Ajamian: We do have a partnership, a JV with Cronos Group.
James West: Great.
Vahan Ajamian: We will be working with them. We have access to their cultivation, and open up stores on a JV basis; 50-50 in the provinces that will allow it. We’re probably looking more at the western provinces, B.C and Alberta for now. We’ll see how it goes in other provinces in the future.
James West: Sure, sure. Okay so then in terms of the revenue build, what is the current state of financials today, in terms of quarterly sales and gross margins, etc.
Vahan Ajamian: We’ll be reporting Q1 very shortly and then obviously Q2. What I would say is we expect revenue will pick up over the course of this year and into next year. California went recreationally legal January first and something like all store needed to be turned off. You had to wait for each municipality to grant your licenses.
Momentum has been building within our larger stores. Line-ups have been building and we’re getting more and more stores open. We should see good momentum going into Q1, Q2, Q3 and Q4.
James West: Okay
Vahan Ajamian: As well as our cultivation facilities. We just opened the one in RENO, it’s called Mustang, in Nevada. That’ll be supplying our stores as well as others. Phase one is done. Plants are in the ground and then in California we just broke ground about two weeks or so on the cultivation facility there. We’ll be getting both revenue from the retail stores and from the cultivation.
James West: How big is the cultivation facility in California?
Vahan Ajamian: It’s still under construction. There will be a phase one and then expansion.
James West: Is the company going to issue any specific guidance in terms of financials?
Vahan Ajamian: Not that I know of currently. We’re in expediential growth phases.
James West: Early days, sure.
Vahan Ajamian: A lot of moving parts in different states and different municipalities.
James West: Is there a U.S symbol for the company?
Vahan Ajamian: We are working on that I believe. Nothing right now. It’s just on the CSE.
James West: Right, right. Do you anticipate, I mean obviously they started off with these funds and then sort of cherry-picked the assets to become operators and come up with this great idea.
Do you foresee, I mean can we deduce from this development safely that even large capital pools in the United States are now comfortable investing in cannabis despite the federal prohibition and even comfortable crossing borders with their capital without fear of Jeff Sessions pulling some sort of confiscation move.
Vahan Ajamian: Sure I think so. We’re were looking to raise about $50 million and we ended up closing on more than double than that, 110. We have lots of really large investors, people that you would know, took meetings, got in orders. I think they see where the industry is going.
We’ve had a couple years now in Canada where there’s 30 or 40 odd listed companies. Right now we need to focus on the big 5. The big 5 are getting the lion’s share of revenue, market share, investor dollars, media attention. I think that’s where we’re going in the United States.
James West: Right.
Vahan Ajamian: A year from now there will probably be a big 5 in the U.S. We’re solely number one right and our intention is especially now that we’re public our goal is to maintain number one. I think this time of industry where something isn’t necessary take all but where it’s few winners take most and our intention is to cement our status as number one player.
James West: You bet. Alright that’s a great introductory interview. We’re going to leave it there for now. We’ll come back to you in a quarters time and see how the company is doing. Thanks so much for coming in today.
Vahan Ajamian: Thanks for having me.
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Original article: VIDEO: MedMen Enterprises Discusses IPO & Retail Stores
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