On April 26, multi-state cannabis operator MedMen announced that it has filed for bankruptcy with the Canadian Bankruptcy and Insolvency Act, as of April 24. Recorded liabilities include approximately $561 million CAD, or $411 million USD.
MedMen’s bankruptcy trustee B. Riley Farber Inc. was appointed to represent the company and manage outstanding business obligations (debt, assets, etc.). Its California-based subsidiary, MM CAN USA, Inc., entered receivership by the Los Angeles Superior Court on April 23, and an appointed receiver through “Santa Monica Division” to “to effectuate an orderly dissolution and liquidation of its California based assets.”
Amit Pandey, MedMen Chief Financial Officer, resigned on February 13, but all other MedMen directors resigned prior to the announcement of bankruptcy proceedings.
In a press release, MedMen wrote that receivership proceedings will also be held in other states where MedMen operated. “It is contemplated that ancillary receivership proceedings will be sought in those U.S. states where MM CAN USA, Inc. controls or owns assets,” MedMen stated. “As a result of such receivership proceedings, the operations and assets of MedMen’s subsidiaries will be dissolved or liquidated pursuant to applicable laws in the United States.” Prior to bankruptcy MedMen had operations in California, Illinois, New York, Nevada, and Massachusetts.
A statement prepared for the press release also briefly speaks about why bankruptcy was pursued. “The difficult decision to shut down operations and commence the Bankruptcy Proceedings and Receivership Proceedings was made after careful consideration of the current financial condition of the Company and its subsidiaries, their inability to pay their liabilities as they become due and the anticipated enforcement actions of secured creditors,” MedMen wrote. “After careful consideration of these factors and in the absence of other available alternatives, the board of directors of the Company determined that it was in the best interests of the Company to proceed with the commencement of the Bankruptcy Proceedings and Receivership Proceedings.”
Fortune spoke with industry analyst Alan Brochstein about the collapse of this once massive and successful company. “MedMen has been ‘DeadMen’ to most investors for a long time,” Brochstein said to Fortune. “The world should have seen this coming, but not everybody did.” Brochstein shared that by the time that 2020 rolled around, MedMen was already deep in debt.
MedMen was founded in 2010 by Andrew Modlin and Adam Bierman. The brand later went public in 2018 for $3 a share. At its height MedMen was valued at $3 billion, and was often compared to an Apple store because of its clean and crisp design aesthetic in dispensaries.
In March 2018, MedMen partnered with Cronos Group (a Canadian-based cultivator) to begin selling MedMen products in Canada. “We want to change the perception of cannabis worldwide, and bring it to the mainstream,” said Mike Gorenstein, Cronos Group CEO. “It was really clear MedMen offered, by far, the best retail experience. We wanted to make sure we could bring that to Canada.”
Daniel Yi, MedMen’s spokesperson, spoke about the historic move at the time. “I think this is a milestone for the industry,” Yi said. “You have an American and Canadian company with track records and resources to execute this venture—a meeting of giants. This speaks to the larger movement in mainstreaming marijuana and it shows that it is a global movement.”
Going public launched the brand into numerous deals and partnerships to continue growth.
In March 2018, MedMen opened its dispensary in New York. In June, it was among the first dispensaries to open in California after adult-use licenses were approved.
In August 2018, it obtained an exclusive licensing agreement with the Woodstock Cannabis Company. In that same month, former Los Angeles Mayor Antonio Villaraigosa joined the MedMen Board to provide expertise as a former politician. In November 2018, MedMen attempted to file a trademark application for the word “cannabis” (the trademark application was abandoned in August 2019).
MedMen was involved in a class action lawsuit in late 2018 and was accused of committing multiple labor violations, which was just the first of various lawsuits involving the company. Another lawsuit in 2019 targeted MedMen for a wrongful termination. In 2022, additional litigation accused MedMen of owing $950,960.02 in unpaid rent in New York.
MedMen’s stock also dropped for most of 2019, as it paid high taxes as a legal cannabis business but had trouble competing with illegal sales. The company initiated the purchase of PharmaCann, but announced that it would be backing out in fall 2019. “The underperformance has made it increasingly more critical to allocate capital efficiently, given the current industry headwinds,” MedMen wrote in a press release.
However, the 2020 pandemic led to a major increase in sales as countless people lost their jobs, which helped MedMen and other cannabis business owners survive through the year.
The start of January 2024 signaled trouble for MedMen when its stock price hit zero on the Canadian Stock Exchange. By March, all MedMen stores closed except one location in San Diego and another near Los Angeles International Airport.
H/T: HighTimes
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