A cannabis business that was once worth $1.7 billion is now on the brink of failure
A chain of cannabis stores once dubbed the “Apple Store of Weed” and valued as a public company at up to $1.7 billion is on the brink of financial collapse, according to a regulatory filing.
MedMen said it was down to $15.6 million in cash versus $137.4 million in debt.
“The conditions described above cast significant doubt on the company’s ability to meet its obligations for at least a year,” the company said in its filing last week.
MedMen is just the latest of the one-time cannabis darlings to face reckoning as the industrial bubble of five years ago collapses on the back of over-indebtedness, falling marijuana prices, competition from illegal sellers, and high taxes. The reality, as with any retail business, is that opening stores is expensive and incurring debt is risky — even as more and more states legalize the sale of marijuana.
Based near Los Angeles, MedMen operates 23 stores including locations in California, New York and Illinois. To cut costs, the company sold its Florida stores last year, is attempting to sell its New York stores and is also attempting to renegotiate leases for the remaining stores.
The company has already defaulted on some of its debt, the filing said, and it must obtain an extension or refinance it.
In 2018, MedMen went public through a reverse merger amid a spate of cannabis deals. Early on, shares soared to over $8, but today shares are trading for just 4 cents.
Shares of other cannabis-related companies have also suffered as the cannabis business has lost its shine among investors. For example, stock of Tilray Brands, a cannabis producer that’s among the industry’s largest companies, is down more than 90% from its all-time high, while Canopy Growth, another major player, is down a similar amount.
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