Cannabis Stock Lies and Intended Deception
As an owner of a dispensary I am constantly asked what stocks I invest in and what I think about cannabis stocks. In this short article I will show how these companies use statistics, pay for articles and use huge discount to make them seem like a great investment with tons of growth potential. I am going to use Budee delivery & Medmen Inc. as my examples of way over valued companies that aren’t worth half their stock value. Please research before investing in any cannabis company. (All numbers aren't exact but are very close if off at all.)
When it comes to growth, make sure you look at the change in growth of the stores that were already open and not the total gross income. Medmen opened 13 new stores in 1 year and said its gross income grew by almost 160%. But if you looked at their California Growth where they didn't add any stores, they grew by a mere 9%. The 160% growth was by adding multiple stores, so of course they are going to add growth. But it should have been multiples of growth around 300% to 400% year over year like Truelieve in Florida. With cannabis being so newly accepted and having medical benefits also, 9% growth is horrible. At Organic Care I personally would be pissed. I aim for 15 to 20% growth month-over-month. Year-over-year I am shooting for 300+%, just to give perspective. Another deception tactic by the companies is to pay to have nicely written articles about their growth by huge magazines, influencers or companies.
It's regular practice for cannabis companies to pay a magazine, journalist or company to write a glorifying article about the growth, specialty and how great they are. It's intended to make you think they were chosen for the article because they are the best in the space, not cause its paid for. It's totally legal, as long as the paid company simply has 1 paragraph explaining how they were paid to write the article. It's always at the bottom, so if you scroll all the way down and read the bottom of the article, they will write how they are paid and use forward-looking statements. Forward-Looking Statements means they are saying what "could" "may happen" "potential", basically glorifying expectations to the highest it could possibly become. So please research the specific company and what competitive advantage they have that explains their valuation. Some companies have huge growth, but they are spending millions getting that growth.
Budee gives 10% off first order, $5 off 2nd order. So, they are losing tons of money while growing exponentially. Yet there are other companies in the industry that grow exponentially without having to lose tons of money on deals. All growth isn't good growth. You also only get 1 first impression and when you guarantee 60 minutes or less delivery and show up in 3 hours. People get pissed. Budee has tons of articles about its huge growth and how over 80% of deliveries are delivered within an hour to ANY WHERE in California. Yet I have called multiple times to get an order in Sacramento, where they are based, and I am given a 2 to 4 hours delivery eta? WTF! I have called multiple times to see if it is an outlier and not at all. Not once have I been given an eta under 1.5 hours let alone under an hour. You can tell it's real with the reviews they have online. That is why I suggest always looking up customers reviews of any company you look to invest in.
Budee claims to have great customer service and rating yet here are just some reviews from a few different cities. They have expanded to fast and can't deliver what they promise. Here are just two cities but I have never seen their rating above 4 Stars. Organic Care has 7 spots, and our lowest rating is 4.7 Stars, and I am not pleased about it. 3 Stars and I would have a heart attack, 1.9 Stars and I'm shooting someone LOL
Budee also made acquisitions to get its growth, buying Recreational Mountain Delivery and Ganjarunner. So, they really haven't grown exponentially, they just merged 3 companies under 1, so of course, it will look likes its exploded in growth. In acquisitions they greatly overpay. Mountain recreational delivery sold for over 1.6 million plus salary and more. With overpaying it's hard to see this company making any profit in the short term. Plus, if they like acquisitions as a company, they might tend to do that instead slow growth, which will make your less stock valuable less because the companies always acquire with stock as a huge portion. The more shares of the company, the less value. Medmen prints stock like paper. They create new shares all the time making your worthless.