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We used to cover the activities of MedMen when it was a leading cannabis company, but the last article we ran on the company was more than a year ago when the company exited Florida by selling its operations there. The company had some big news this week, but we didn’t share it because there were no financial terms disclosed. MedMen announced that it will be exiting Arizona and Nevada through the sale of its operations to Mint Cannabis, a private company that began operations in Arizona.
MedMen is a California company that was expanding into other states. Its website still lists the two stores it operates in Nevada and the one it operates in Arizona, and it also includes a bunch in California as well as two in Illinois, one in Massachusetts and four in New York. Interestingly, the Mint Cannabis website indicates that stores are “coming soon” to Nevada as well as Illinois and Massachusetts.
MedMen has been a terrible stock, though it is not doing too badly in 2023, roughly unchanged at $0.014. In early 2019, it was above $3, so it has lost over 99% of its value since then. It peaked near $7 in Q4 of 2018.
We doubt that many investors care much about this stock. It is very behind on its filings with the SEC. The last time the company filed was in January, reporting for the quarter ending 12/24/22. At the time, it had 1.3 billion shares outstanding, so the market cap is just $19 million. The company reported falling revenue in the first half of its FY23 and an operating loss. The balance sheet was horrible a year ago: total equity of -$329 million.
While most investors likely don’t care, we think some should. In August of 2021, Tilray Brands announced that it was acquiring a portion of the $165.8 million of notes and warrants held by Gotham Green Partners in exchange for approximately 9 million of its shares, which were then over $13. The company issued 9.8 million. In the 10-Q for its Q1, TLRY carried the asset at $74.7 million, down from the original value of $117.8 million.
So, those who referred to MedMen as “DeadMen” ended up being correct, as the company struggles to stay alive. We discussed last week how a failure of 280E to go away could extend the challenges American cannabis operators are facing. The demise of MedMen offers a potential preview, so let’s hope for the best.
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Alan & Joel