corporations
USA: MedMen declares bankruptcy with 400 million dollars of debt
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The North American cannabis giant MEDMAR has collapsed under the weight of its debt, announcing last week that it has declared bankruptcy and plans to liquidate its assets. On April 26, the once successful MSO (multi-state operator) announced that it has filed for bankruptcy under the Canadian Bankruptcy and Insolvency Act and that all of its directors have resigned with immediate effect, following the dismissal from your CFO in February.
Additionally, on April 23, 2024, MedMen's California-based subsidiary, MM CAN USA, was placed into receivership in Los Angeles Superior Court to dissolve and liquidate its assets.
The company's Restructuring Director resigned from his position and was appointed Judicial Administrator of MM CAN USA. Similar bankruptcy proceedings are expected to occur in other US states where the subsidiary operates.
This bankruptcy comes just six years after the company's IPO, seeing the company's value reach a peak of $3 billion in the following months. The company now leaves behind more than $400 million in debt. Like many of its peers, MedMen rode the wave of positive sentiment in 2018, seeing its share price more than double by the end of the year.
The company expanded rapidly, growing to 25 locations in California, Nevada, Illinois, Massachusetts and New York, taking on significant debt in the process. In 2019, MedMen attempted to finalize a $682 million merger with PharmaCann, which ultimately fell apart due to concerns antitrust, leaving the company struggling to pay its creditors.
Scandals continued to dog the business, leading to its founder, Sam Bierman, being ousted in 2020, embroiled in allegations of misuse of company funds. Further legal battles, accusations of racism and increasing competition from legal and illegal cannabis markets plagued MedMen during its fall from grace.
Since its peak, the company's share price has fallen by more than 90% and all but two of its stores have closed.
“The difficult decision to cease operations and initiate bankruptcy and receivership proceedings was made after careful consideration of the current financial situation of the company and its subsidiaries, its inability to pay its obligations when due and the anticipated enforcement actions of guarantee by creditors”, said the company in a press release.
“After careful consideration of these factors and in the absence of other available alternatives, the company's board of directors determined that it was in the company's best interest to proceed with the initiation of bankruptcy and receivership proceedings,” the statement ends.
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This article was originally published by Ben Stevens on Business of Cannabis
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[Disclaimer: Please note that this text was originally written in Portuguese and is translated into English and other languages using an automatic translator. Some words may differ from the original and typos or errors may occur in other languages.]____________________________________________________________________________________________________
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Ben is the editor of Business of Cannabis. Since 2021, he has researched, written and published the vast majority of the outlet's content, delivering agenda-setting journalism on regulation, business strategy and policy across Europe.
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