MariMed Inc: Here’s Why This Tiny Pot Stock Is Expected to Soar In 2020

MariMed Inc: Here's Why This Tiny Pot Stock Is Expected to Soar In 2020MariMed Inc Poised to Soar in 2020

MariMed Inc (OTCMKTS:MRMD) was one of the best-performing cannabis stocks in 2019, climbing more than 300%. Today, shares of the Norwood, Massachusetts-based company are trading around $0.62 per share.

If there’s one pot stock that shouldn’t be trading at this kind of a discount, it’s MariMed stock. Judging by all the new developments going on at the company, this stock likely won’t be at its current price level for long.

Marimed has announced strong third-quarter results, a multi-state agreement with a beverage distributor, a multi-state licensing agreement, and the opening of new dispensaries.

The company also recently acquired two medical cannabis dispensaries in Illinois, a state that is set to begin selling recreational cannabis legally on January 1, 2020.

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MRMD Stock Overview

MariMed is one of the largest multi-state marijuana companies in the United States. It manages more than 300,000 square feet of facilities and holds 13 licenses for cannabis cultivation, production, and dispensaries. (Source: “What We Do,” MariMed Inc, last accessed December 11, 2019.)

While the company operates a number of facilities in six states (Delaware, Illinois, Maine, Maryland, Massachusetts, and Rhode Island), it has an active global expansion plan.

In April, the company acquired 70% of MediTaurus, LLC. That company’s “Florance” line of cannabidiol (CBD) products has a strong presence in the U.S. and Europe. (Source: “MariMed to Acquire Majority Stake in International CBD Pioneer MediTaurus; Dr. Jokūbas Žiburkus Appointed MariMed Chief Innovation Officer,” MariMed Inc, April 25, 2019.)

With the acquisition, MariMed gets access to MediTaurus’s significant intellectual property.

MariMed also recently formed MariMed Hemp, a subsidiary focused on CBD products. (Source: “MariMed Consolidation Continues with Acquisition of Illinois Cannabis Businesses,” MariMed Inc, October 21, 2019.)

While you can find MariMed’s products in select states, the company is expanding its licensing and distribution channels to a number of new markets.

MariMed Stock Information

Market Cap $137.0 Million
52-Week Change -78.3%
52-Week High $5.33
52-Week Low $0.51
Shares Outstanding 219.2 Million
Float 134.3 Million
50-Day Moving Average $0.81
200-Day Moving Average $1.38

(Source: “MariMed Inc (MRMD),” Yahoo! Finance, last accessed December 11, 2019.)

MariMed’s consolidation efforts continued in October, when the company announced that it acquired two medical-marijuana-licensed clients: KPG Anna and KPG Harrisburg. (Source: MariMed Inc, October 21, 2019, op. cit.)

With this transaction, MariMed moves closer to completing the consolidation of its cannabis client businesses that it manages in various states.

These acquisitions are a major milestone for MariMed. When recreational weed becomes legal in Illinois in 2020, companies that already have medical licenses in the state will be given priority over new applicants.

MariMed operated the two KPG retail sites as medical marijuana dispensaries, but once the new law kicks in, the Anna and Harrisburg operations will operate as both medical and recreational dispensaries.

MariMed is also looking to open two additional recreational pot dispensaries in Illinois, bringing its total number of dispensaries in the state to four.

Q3 Cannabis Revenue Up 24%, Hemp Revenue Soars 230%

On November 27, MariMed announced that revenue for its third quarter ended September 30 increased 231% year-over-year to $11.2 million. (Source: “MariMed, Inc. Reports Strong Q3 with Solid Performance of Key Operating Metrics,” MariMed Inc, November 27, 2019.)

Cannabis revenue was up 24% at $4.2 million, while the company’s hemp division reported revenue (mostly from seed sales) of $7.0 million.

Operating income for the third quarter of 2019 increased to $973,000, up from an operating loss of $549,000 in the third quarter of 2018.

MariMed reported a 2019 third-quarter net loss of $7.3 million, which was mainly due to interest expenses on short-term loans used to fund hemp seed purchases.

The third-quarter 2019 loss was also attributed to the company’s equity in the net loss reported by GenCanna Global USA, Inc., which was a result of a one-time adjustment of $6.1 million.

Back in February, MariMed became GenCanna’s largest shareholder after converting its initial $30.0-million purchase of debentures into common stock. (Source: “MariMed Converts $30 Million in GenCanna Global Debentures to Equity Stake,” February 1, 2019.)

MariMed is helping GenCanna expand its hemp cultivation to more than 10,000 acres. GenCanna will then provide MariMed Hemp with CBD.

Analyst Take

Thanks to new developments at MariMed Inc—which includes acquisitions, new dispensaries, new products, and expansion of its business footprint—MariMed stock is poised to make serious gains in 2020.