Here's How Kannaway Fits In To Medical Marijuana Inc (OTCMKTS:MJNA)

Medical Marijuana Inc (OTCMKTS:MJNA) just put out some news related to one of its subsidiaries, and the company is picking up a bit of a volume spike as a result. This one is a bit of a strange play. Every time we cover the company, the news that drives our coverage points towards some near-term strength. We often get said strength immediately post-coverage, but take a look at the longer-term charts, and the overarching momentum is very much to the downside. Further, this goes against the progress reported by a number of its subsidiaries, especially that of biotechnology stock Axim Biotechnologies Inc (OTCMKTS:AXIM). Medical marijuana has a large stake in the latter, but while Axim has appreciated in value of late, Medical Marijuana has not.Our response from a coverage perspective, then, is that we've got to be nimble. Take the PRs as quick turnaround events and take developments one by one.So how does the latest release play into this scenario? Let's take a look.As noted, it refers to one of the company's subsidiaries, specifically, an entity called Kannaway. The company is a hemp oil product outfit, which designs develops and sells a whole range of different hemp oil based items in the health and wellness space. The latest news is broken into two specific releases – one that covers some growth numbers, and another that details a fresh HR appointment.The former is a little odd. We have noted in the past that this company likes to maintain a pretty constant stream of press releases, and while there is some pertinent information in this latest release, it is slightly convoluted. As part of the PR, the company announced that the subsidiary in question, Kannaway, has increased its revenue elevenfold from March 2016 to April 2017. Further, that during the same period, it increased its active distributor base by 341%, grew the Company's active customer base by 500%.Regular readers may remember when we first looked at this brand, and we highlighted it as being a sort of multilevel marketing outfit in the cannabis and hemp oil space. That remains the case, and so to see an increase in active distributor base is important, as is the active customer base increase. Given that we only have percentage figures here, however, the release doesn't offer that much in the way of insight.The second release details the hiring of a fresh member to the Kannaway team – a guy called Jakub Duda who has been appointed as Operations Director of Kannaway Europe. This side of the business isn't actually up and running yet, and Medical Marijuana expects it to be operational by the fourth quarter of this year. The release highlights the fact that Duda and the current Kannaway CEO Blake Schroeder have worked together in the past on a couple of $50 million gross enterprises, and a quick look at Duda's LinkedIn suggests these were ForeverGreen and MonaVie. Both are entities with a similar model to Kannaway (multilevel marketing type direct sales/distribution setups) and it looks as though the Kannaway subsidiary is set up to grow into the latest Duda/Schroeder-led incarnation of what is essentially the same model.That's not a bad thing, of course. These two have executed on this model successfully before as outlined above, and with hemp and cannabis the new hype market in health and wellness, timing couldn’t be better.And how does all this play into our thesis?Well, it doesn't really change much. Medical Marijuana, as a company, is likely going to derive more value from its Latin American operations (and its potential as an epilepsy treatment provider, as outlined in this piece) than it is from a pyramid type model in the US. Near term. Longer term, however, this isn’t necessarily the case. If the model takes off, and there are numerous examples of these sorts of models doing just that, then it could be a nice (and low operating cost) revenue driver for the parent company.Keep in mind that any exposure is going to get diluted between now and the end of the year, perhaps sooner. Revenues are far from sufficient to sustain the company's operations-wide expansion right now and shareholders are going to have to foot the bill for the foreseeable future. If it keeps expanding as is, however, there should be more than enough catalyst-driven price action to outweigh the impact of any raise/s.We will be updating our subscribers as soon as we know more. For the latest updates on MJNA, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.