Swot Analysis Of Medical Marijuana

Strengths

Name recognition – company name is representative of the industry they are in.

One of the largest marijuana companies in terms of market cap, with company valued at over $250 million (Speights, 2017).

Domestic market, one of the very few large industry companies in the U.S.

Risk-protected portfolio (many products produced contain cannabidiol (CBD) instead of the highly regulated THC).

Financially invested in multiple cannabis-related companies and subsidiaries, spreading their financial risk across multiple ventures.

High growth rate – tightly linked to marijuana industry.

First publicly traded cannabis company in the United States, allowing for growth through both public and private investments.

Economies of scale – farming equipment can be used for growth of farm size acreage, and so more plants can be harvested using the same facilities and equipment.

Skilled workforce – employees and contractors are specifically trained to manage cannabis plants and medical marijuana production.

Portfolio includes both marijuana products as well as services related to the industry, creating diversification to hedge risk.

Weaknesses

Market value has dropped 50% in 2017 alone, which could hinder the company’s ability to grow financially.

Company is still in a development stage.

Product line has not yet been proven definitively to be effective.

Requires very high quality control in cultivating medical cannabis

Public perception of marijuana use is still mostly negative

Opportunities

New geographic markets – as more states legalize medical marijuana use, more demand for the company’s products should increase

Global demand – demand globally for medical marijuana and related products continue to rise.

Agricultural research – marijuana, as with any other plant, comes in a multitude of varieties. These varieties can be further cultivated and cross-engineered to create new varieties for better health effectiveness.

Threats

Federal and state regulations prohibiting sales of marijuana.

Tobacco and alcohol companies investing in, and entering, marijuana industry.

New entrants – growing number of marijuana providers in states where the drug is legal could eventually take market share away.

Company success is too closely tied to industry success.

Alternative Strategies

New geographic markets – Possible, but this strategy is highly contingent on state or federal regulations being lifted for states where medical marijuana is yet to be approved. Taking advantage of growth in other states can be very profitable. However, too much energy and focus on states where legalization may never occur may create financial difficulties and allow the company to lose market positioning in existing regions.

Global demand – Not a good plan, as the global market for medical marijuana has existed longer globally than it has in the U.S., and as a result many companies in other countries (most notably Canada) already have well established infrastructures and market positions in other countries. Breaking into these new global markets could prove far too costly for little return.

Agricultural research – Possible, but would require significant time and money to properly research various combinations of marijuana plants, as well as to develop these plants for cultivation and mass production.

Final Recommendations to Management

It is our opinion that Medical Marijuana, Inc should pursue a strategy of focusing on global demand, providing a strong foundation for future growth. By entering global markets, Medical Marijuana, Inc will expand their customer base and begin to realize increased sales and revenue. The regulations in other countries are likely to be looser than those currently existing in the U.S., most notably countries like Canada where medical marijuana use is legal and the country is planning to legalize marijuana for recreational use by July 2018 (Freeman, 2017).

By entering an existing global market where medical marijuana is legal and established, Medical Marijuana, Inc can also begin to develop strategic partnerships with suppliers and distributors who already exist in the market. Taking advantage of an existing supply chain and distribution network will make it more cost effective to market the company’s existing product line.

We believe that the global expansion strategy is safer than waiting on entering new domestic markets. There is still too much uncertainty pertaining to whether or not further legalization will occur in these states, and there is always the threat of federal regulations prohibiting the use of medical marijuana for even states currently allowing it. Although Medical Marijuana, Inc should re-evaluate their position in these states ifwhen those states legalize marijuana for medical use, establishing a strategic plan for markets which may never arise is risky at the current time.

The agricultural research strategy is one that could allow Medical Marijuana, Inc to separate itself from competitors. By pursuing a differentiation strategy through the development of new breeds of marijuana plants, Medical Marijuana, Inc could provide avenues for new treatments against various ailments, including ailments which perhaps were previously unaddressed from the use of marijuana. However, given the extensive capital required to conduct proper research and development, and the low success rate of developing a viable breed of marijuana to create differentiation, as well as the instability of the entire industry due to federal and state regulations, we believe this strategy carries too much risk at the present time.

In conclusion, although there are a few different strategies which could position Medical Marijuana, Inc as a leader in medical marijuana, it is our opinion at this development stage that a global strategy within already established markets may prove to be the best short term strategy for both the company’s financials as well as long term growth.

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