MW Cannabis company MedMen files for bankruptcy with about $411M in liabilities as it fortunes go up in smoke
By Steve Gelsi
Once hailed as the unicorn of pot, MedMen files bankruptcy in Canada with plans to liquidate any assets
Former high-flying cannabis company MedMen Enterprises Inc. filed for bankruptcy protection late Friday with about C$561.5 million ($411 million) in liabilities.
The filing comes about five years after MedMen's market valuation peaked at about $3 billion as California's legal recreational marijuana business started to gear up.
Also read: MedMen goes from height of $3 billion valuation to zero as stock draws cease-trade order and top execs leave
MedMen $(MMNFF)$ said the decision to file for bankruptcy was "difficult" but necessary "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," according to a statement.
The company named B. Riley Farber Inc. as its bankruptcy trustee and said it was shutting down operations, with plans to liquidate.
The company's California-based subsidiary MM CAN USA Inc. was placed into receivership in Los Angeles Superior Court as part of a liquidation process of its assets there.
Other bankruptcy proceeds will be pursued in other states where MM CAN USA Inc. controls or owns assets. MedMen has had a store on 5th Avenue in New York City for several years. It's also had a presence in in Nevada, Illinois, and Massachusetts.
"The operations and assets of MedMen's subsidiaries will be dissolved or liquidated pursuant to applicable laws in the U.S.," the company said in a statement.
The company has scheduled a May 14 meeting of creditors.
MedMen's Chief Financial Officer Amit Pandey resigned on Feb. 13, followed by each of the company's directors prior to the bankruptcy filing.
In its better days, MedMen Enterprises drew attention for its open-plan dispensaries, furnished with display tables showcasing edibles, buds and vapes and outfitted with touchscreen tablets. The company opened its flagship store in Midtown Manhattan's upscale 5th Avenue to sell medical cannabis on April 20 of that year.
But losses piled up. And so did questions about executive compensation, legal battles, layoffs and stiff competition - from the legal market and the illicit one
In 2021, Tilray Inc. (TLRY) and other investors revealed plans to buy about $166 million in convertible MedMen debt and warrants held by Gotham Green Partners.
The notes were to convert to a roughly 26% stake of MedMen's shares, contingent upon U.S. legalization of cannabis. At the time, the maturity date for the debt was set at Aug. 16, 2028.
A Tilray spokesperson did not comment about MedMen's bankruptcy filing.
While MedMen spent heavily to position itself for a boom in legal cannabis sales, it ran into competition not only from other licensed cannabis sellers, but the unregulated markets in New York and California.
Bill Peters contributed to this report.
-Steve Gelsi
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April 29, 2024 07:31 ET (11:31 GMT)
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