3 Arguments For and Against Buying MedMen Enterprises

Big things are afoot in the marijuana industry. Having long been considered a taboo industry, cannabis is no longer that.

Last year, Canada became the first industrialized country in the world to give the green light to recreational marijuana, and a handful of U.S. states continued a trend of state-level medical and/or adult-use legalizations. Throughout North America, Canada is legal medically and recreationally; Mexico is legal medically and is seriously considering adult-use legalization this year; and two-thirds of all U.S. states have approved some form of pot legalization, despite the federal government maintaining its Schedule I classification on the drug. It’s a dramatic turnaround for the industry in a short time frame, and it bodes well for long-term pot stock investors.

The big question is: What marijuana stocks to buy?

One of the most popular names, especially downstream in the cannabis supply chain, is MedMen Enterprises (NASDAQOTH:MMNFF). MedMen, which operates roughly 20 dispensaries spanning five states at the moment, but has far bigger aspirations, offers plenty of reasons to be a buyer. Then again, there are a fair number of reasons to avoid such a high-profile, vertically integrated dispensary. Let’s take a closer look at the arguments from both sides of the aisle.

Three reasons MedMen is a smart long-term buy

Arguably the most compelling reason to buy into MedMen is the company’s proposed $682 million acquisition of privately held PharmaCann. Once the transaction closes, pending regulatory approval, it’ll leave MedMen with 77 retail licenses, 16 processing facilities or grow farms, and a presence in a dozen states. Prior to this deal, it was on track for around 50 retail licenses in six states, with five processing facilities or grow farms.

The reason acquisitions are such an attractive pathway to growth in the vertically integrated dispensary space is simple: Time is money. The dispensary space relies on legalized states to issue cultivation and processing licenses, as well as sales permits. In some instances, it can be quite costly and time-consuming to go through the approval process for these steps. Knowing this, MedMen did the smart thing by scooping up PharmaCann, which already has a number of retail, grow, and/or processing licenses in place. This is going to save MedMen time and money as it attempts to expand across the United States.

A second reason to consider MedMen as a stock to hold for a long time is…

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