MedMen declares bankruptcy

Cannabis retailer MedMen has initiated bankruptcy proceedings in Canada, declaring approximately $411 million in liabilities, as it exits the industry. The company, which operates across several U.S. states, filed under Canada’s Bankruptcy and Insolvency Act on April 24, as stated in a recent announcement. B. Riley Farber Inc. has been appointed as the trustee to oversee the bankruptcy process.

MedMen disclosed that its California-based American subsidiary entered receivership on April 23, as per filings in the Los Angeles Superior Court. This step is intended for the orderly liquidation of the subsidiary’s assets, following U.S. legal protocols.

No word on how the developments will affect the company’s West Hollywood outlet, which closed abruptly earlier this year and just recently had re-opened.

In conjunction with these developments, MedMen’s Chief Financial Officer, Amit Pandey, stepped down on February 13, and all company directors resigned just prior to the bankruptcy initiation.

These drastic measures stem from a comprehensive review of the financial health of MedMen and its subsidiaries, revealing their failure to meet financial commitments and the looming actions of secured creditors.

“The decision to discontinue operations and start bankruptcy and receivership was a difficult one, made after thorough evaluation of our dire financial state, our ongoing liabilities, and the expected moves by secured creditors,” a company statement explained.

Established in 2010 and going public in 2018, MedMen once enjoyed rapid growth, expanding its retail and cultivation footprint across the United States. Despite raising significant funds, including $110 million before its public offering, persistent challenges such as financial mismanagement, legal disputes, and labor issues led to substantial debt, diminishing profits, and eroding public trust. These issues, compounded by frequent changes in leadership and negative publicity, severely impacted MedMen’s operational and financial stability.

In early 2023, MedMen’s shares plummeted to negligible values as financial hardships continued to mount, evidenced by a reported $137 million debt against only $15 million in available cash. These struggles were further highlighted by layoffs and a steep decline in revenue.

In a notable development in 2021, despite these setbacks, Tilray and other investors, including Gotham Green Partners, agreed to acquire $166 million in MedMen’s convertible debt, a deal contingent on the future legalization of cannabis in the U.S. This investment could potentially convert into a significant equity stake in MedMen, offering a lifeline to the beleaguered company.