Enterprise

Med Men, the Fall of a Giant

MedMen, a California-based chain of cannabis stores once described as the “Apple store of weed” and valued at up to $1.7 billion, is on the verge of financial collapse. The company said it has only $15.6 million in cash left against $137.4 million in debt. Of course, it is just the latest of the former cannabis darlings to face a difficult situation as the industry bubble deflates.

MedMen, a California-based chain of cannabis stores once described as the “Apple store of weed” and valued at up to $1.7 billion, is on the verge of financial collapse.

The company said it has only $15.6 million in cash left against $137.4 million in debt.

To follow this story as it unravels, along with all the latest lifestyle and legalization news, download our free cannabis news app.

MedMen Is Cash-Strapped and its Future Is in Doubt

“The conditions described above raise substantial doubt about the company’s ability to meet its obligations for at least one year,” the company said.

MedMen also noted that “its cash requirements are significant and cannot be met with current cash flow from operations.”

MedMen has faced a long list of challenges, from selling its Florida assets for $16 million less than the initial offer to a failed sale of its New York assets to multi-state cannabis operator Ascend Wellness.

The MedMen Survival Plan

MedMen said it would delay opening new stores, permanently or temporarily close underperforming stores, and conduct other restructuring activities. The company is still looking for a buyer.

Shares of MedMen (MMEN) were trading at 4 cents Tuesday on the Canadian Securities Exchange, down from $8 after its introduction.

Is the Cannabis Bubble Bursting?

When cannabis legalization first came to the US, there was a massive surge of investment and speculation in the industry as everyone attempted to get in on the ground floor. Before long, the industry was awash with way more money than it needed, and publicly traded cannabis companies saw stock prices go through the roof.

Since then, most have struggled to deliver on the promises of the “green rush,” but not from lack of demand. Quite simply, early investment oversaturated the market, leaving all but a few falling well short of early financial projections.

MedMen Faces the Cannabis Bubble

MedMen is just the latest of the former cannabis darlings to face a difficult situation as the industry bubble of five years ago deflates. When coupled with excessive debt, falling cannabis prices, competition from illegal sellers, and high taxes, the company faces a lethal combination.

MedMen, based near Los Angeles, operates 23 stores, including in California, New York, and Illinois. In an effort to cut costs, it sold its Florida stores last year, is trying to sell its New York stores, and is also trying to renegotiate leases on its remaining stores.

Of course, shares of other cannabis companies have also suffered from the cannabis sector’s loss of luster among investors. Shares of Tilray Brands, a cannabis producer that is among the industry’s largest companies, are down more than 90 percent from their all-time high, for example, while Canopy Growth, another major player, has lost a similar amount.

(Featured image by ChrisGoldNY (CC BY-NC 2.0) via Flickr)

DISCLAIMER: This article was written by a third-party contributor and does not reflect the opinion of Hemp.im, its management, staff, or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the company may believe that its expectations are based on reasonable assumptions, the actual results that the company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in Newsweed, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Eva Wesley

Eva Wesley is an experienced journalist, market trader, and financial executive. Driven by excellence and a passion to connect with people, she takes pride in writing think pieces that help people decide what to do with their investments. A blockchain enthusiast, she also engages in cryptocurrency trading. Her latest travels have also opened her eyes to other exciting markets, such as aerospace, cannabis, healthcare, and telcos.

Recent Posts

DEA Hearing on Cannabis Reclassification in the United States Postponed to 2025

The DEA has postponed a key hearing on the reclassification of cannabis. The hearing was…

5 hours ago

California Opens Debate on Cannabis Potency With New Report

A new California Department of Public Health report has come out with recommendations for THC…

1 day ago

Ontario Increases Efforts to Combat Illegal Cannabis Market

Ontario is investing $31 million over the next three years to enhance efforts against illegal…

5 days ago

Hanover and Frankfurt Will Be the First German Cities to Legally Sell Cannabis for Adult Use

Frankfurt and Hanover are launching five-year pilot projects for legal, regulated cannabis sales to adults,…

6 days ago

CBD Decree Suspended By Italian Administrative Court for Third Time

Italy's Regional Administrative Court suspended the Health Ministry's decree labeling CBD as a narcotic, pending…

1 week ago

Which U.S. States Will Vote on Cannabis Legalization in November 2024?

This November, five U.S. states will vote on measures related to legalizing recreational or medical…

2 weeks ago