Bad Optics: MedMen Co-Founder Buys Extravagant L.A. Mansion

I’ve got some good news or bad news for you depending on where you’re at with cannabis stocks right now.
 
If you’ve taken the Seed Investor’s warning and kept some powder dry for a Summer Slump, it will be good news.
 
If you hold shares in one of the largest U.S. cannabis retailers, it may be bad news.
 
Because it all could play a big role in where MedMen (CA:MMEN / US:MMNFF) shares go from here in the short run.
 
This summer has been a tough one for many cannabis companies.
 
Few have had it tougher than MedMen.
 
The company fired its CFO, had to raise more capital, and the company has put itself in a risky position in which it could go either way at this point.
 
MedMen share performance has reflected all that uncertainty too.
 
Once we include a recent bounce in price, MedMen shares are down 64% since peaking last October.
 
They’ve even underperformed the North American Marijuana Stock Index has fallen 33% over the same time period.
 
But the hangover from that big run-up in cannabis stocks hasn’t stopped one of its executives from living it up.
 
Variety reported yesterday that Marijuana Magnate Andrew Modlin Snags $11 Million Hollywood Hills Mansion.
 
Modlin is a co-founder and current president of MedMen Enterprises.
 
The home is naturally a beauty, but that’s not the point.
 
Even a softball celebrity rag like Variety is forced to admit, “Though [MedMen] stock has taken a beating since [it’s IPO], igniting debate over future viability, the firm remains among the most famous and successful of its kind.”
 
Variety is not a business-focused paper, so we won’t hammer it for equating fame with success.
 
However, this ill-timed purchase from a prominent MedMen executive raises a lot of questions about the company.
 
Shareholders may be willing to stick it out with MedMen and hope the company’s brand and industry position will help it weather this stormy period.
 
But if a few major shareholders take this news the wrong way, look out below. They could just sell out and walk away.
 
Given the timing of all this, any big selling would could crush MedMen shares.
 
The “Summer Slump” in cannabis stocks is in full swing and even the slightest bit of selling pressure can send these thinly traded stocks down big quickly.
 
That’s why we don’t know if this is a good or a bad thing for you now.
 
We know that retail is the future of the cannabis industry and retail cannabis stocks are priced to perform in the months and years ahead.
 
So, it’s good if we get a chance to buy a premier cannabis retailer on the cheap if this bit of extravagance is viewed poorly by a couple major MedMen shareholders. And it’s a bad thing if you are a big holder of MedMen because there could be a lot more pain before the next round of gains.