California cannabis sales could boost KushCo and MedMen stocks

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The spike in cannabis sales is responsible for the growth of major U.S. businesses

Recreational cannabis sales hit a sudden spike in California. Recent data shows recreational sales came to $350 million in the third quarter, marking a 24 percent increase over the second quarter. Stock analysts say the sales spike could boost U.S. cannabis companies like KushCo Holdings Inc
OTCMKTS: KSHB and Medmen Enterprises Inc CNSX: MMEN.

Cannabis sales in California were disappointing throughout the first half of the year. Experts believe consumers were slow to make the transition from the black market to legal dispensaries. Many Californians disapprove of the regulations that have blocked medical marijuana retailers from obtaining recreational licenses.

However, the number of dispensaries in California grew by roughly 10 percent in the last quarter. Additionally, dispensaries are, on average, reporting higher sales per customer. Average monthly sales increased to $300,000 at recreational dispensaries in the third quarter.

For stocks including KushCo and MedMen that have a business presence in California, the sales spike is a good thing. KushCo will need to up its production of packaging while MedMen’s dispensaries should be experiencing growth.

California recently passed a regulation that requires all marijuana products to meet very specific packaging requirements – something KushCo specializes in. Even before the requirement, the company reported 171 percent year-over-year growth.

KushCo has yet to report its financials for the last quarter but its preliminary fiscal-year financial results published in September showed promising growth. MedMen is responsible for the majority of cannabis sales in California. Therefore, the company’s recent 44 percent growth compared to the last quarter can be attributed to the spike in cannabis sales in California.