Which stock wins in a matchup between a U.S. marijuana retailer and a Canadian cannabis grower?
Marijuana stocks aren’t all alike. MedMen Enterprises Inc. (NASDAQOTH:MMNFF) and CannTrust Holdings Inc. (NASDAQOTH:CNTTF) prove the point. Their business models are very different. MedMen is a U.S.-based company, while CannTrust is headquartered in Canada.
So far this year, CannTrust has turned in a better stock performance than MedMen has. But which of these two marijuana stocks is the better pick for investors now? Here’s how MedMen and CannTrust stack up against each other…
The case for MedMen
MedMen Enterprises is the leading marijuana retailer in the U.S. It currently operates dispensaries in California, Nevada, and New York. But in MedMen’s own words, the company doesn’t “run pot shops.” Instead, MedMen manages “class-leading retail stores that happen to sell marijuana and marijuana products.”
Is that just spin? No. In its most recent quarter, MedMen reported revenue per square foot of $6,541 at its seven cannabis stores operating in California. That figure tops the best retailers in the world, including Apple and Tiffany & Co. MedMen also generates roughly three times more revenue than the average marijuana dispensary in California.
This impressive performance stems from a focus on the details. In particular, MedMen carefully selects its retail locations. The company’s California stores are based in strategic markets such as Beverly Hills, Venice Beach, and the LAX airport. MedMen recently opened its first branded store in Las Vegas near the major casinos. It’s also relocating an existing dispensary to near the city’s main airport.
It’s still very early for recreational marijuana sales in California and Nevada. But research firms Arcview Market Research and BDS Analytics project that total cannabis sales in California will increase to $7.7 billion by 2022. While California is the largest marijuana market in the U.S., Nevada is also expected to become a significant market, with annual cannabis sales of more than $650 million within the next four years.
MedMen won’t just benefit from growth in the states where it currently operates. The company plans to open marijuana retail stores in Florida and Massachusetts, both of which should claim annual cannabis markets of at least $1.2 billion by 2022. In addition, MedMen has partnered with Cronos Group to launch retail cannabis stores in Canada when legally allowed to do so.
The case for CannTrust
CannTrust Holdings is probably more in line with what you envision when you think of marijuana stocks…
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