Five years after its market valuation peaked at about $3 billion, MedMen Enterprises Inc. is bankrupt. The company filed insolvency proceedings in Canada and was placed in receivership in the United States on April 24. The company intends to liquidate, signaling extinction for the one-time “cannabis unicorn.”
Documents filed with the Canadian and American courts list assets of C$1 and liabilities totaling more than C$561.5 million (US$411 million), of which more than C$359 million is secured debt held by Superhero Acquisition Corp., a holding company two-thirds owned by Tilray Inc.
Companies and individuals left holding unsecured debt include Treehouse Real Estate Investment Trust Inc. (C$101 million); Hankey Capital LLC (C$82.2 million); Matthew Abrams, former co-owner of a dispensary MedMen acquired in 2019 (C$8.4 million); and Verano Holdings LLC (C$1.3 million).
At its peak, MedMen operated at least twenty-nine stores and owned licenses in twelve states. Its stores helped define cutting-edge dispensary design. In 2018 and 2019, backers including Gotham Green Partners, Wicklow Capital, Tilray, and a bevy of hedge funds lined up to invest or lend the company money.
Then, beginning in late 2019, a flurry of lawsuits, public spats between corporate officers, and allegations of profligate spending severely tarnished the company’s image and depleted its coffers. As federal legalization became less likely and competition from both the legal and illicit markets heated up, MedMen could not sustain a multistate operation that reportedly burned through hundreds of millions of dollars monthly. The company initiated several rounds of layoffs and offloaded its operations in Arizona, Florida, and Nevada. Product brands, distributors, and independent contractors began complaining they were unable to collect bills. In some cases, vendors reported the company offered to pay them with shares instead of cash.
The executive suite developed a revolving door; final Chief Executive Officer Ellen Deutsch Harrison stepped down January 19, 2024, after less than seven months in the role. Hot on her heels, Executive Chairman Michael Serruya, whose private equity fund invested $100 million in MedMen in 2021, departed January 24. Chief Financial Officer Amit Pandey resigned in mid-February with the company owing him C$221,940, according to the bankruptcy filing.
MedMen’s share price plummeted to zero on the Canadian Stock Exchange in late January, and trading was suspended. At the same time, the OTC Markets Group labeled MedMen shares extra-risky and stopped providing quotes.
Richard Ormond, a Los Angeles-based attorney specializing in finance, banking, and regulations, resigned as MedMen’s chief restructuring officer immediately prior to filing bankruptcy and receivership paperwork with the courts. Los Angeles Superior Court subsequently appointed him receiver for the company in the U.S. In Canada, B. Riley Farber Inc. will serve as court-appointed trustee. (Full Story)