MedMen Enterprises Inc., once a prominent player in the cannabis industry, has experienced a dramatic downfall, resulting in a cease-trade order for its stock. In 2018, as California’s recreational pot market gained momentum, MedMen opened its flagship store on Midtown Manhattan’s prestigious 5th Avenue, aiming to establish itself as the “Apple Store of Weed.”
At its peak on October 16, 2018, MedMen’s stock reached an all-time high closing price of $6.94, with a staggering market capitalization of $3 billion. However, the situation has substantially changed since then. On January 12, 2023, the stock plummeted to a mere $0.0006, representing a fraction of a penny.
On January 11, the OTC Markets Group Inc. informed MedMen that its shares had been transferred to the OTC Expert Market from the OTCQB market. This move was prompted by the company’s failure to file its 2023 annual report or a 10-Q for the quarter ending September 30. MedMen plans to reapply to the OTCQB after submitting these reports to the Securities and Exchange Commission.
Currently, MedMen stock carries a warning message on the OTC due to its eligibility for unsolicited quotes only. Moreover, on January 5, both the British Columbia Securities Commission and the Ontario Securities Commission issued a cease-trade order on MedMen’s listing on the Canadian Securities Exchange due to a lack of financial filings.
In a filing from May, MedMen disclosed significant financial concerns. The company reported approximately $573 million in total liabilities and a shareholder deficit of about $357 million.
It is worth noting that despite our efforts to obtain an official statement from MedMen regarding these developments, we have not yet received a response to our email.
MedMen Continues to Face Challenges Amidst Strong Competition and Internal Issues
In the first quarter of the year, MedMen reported a net loss of $31.5 million, a slight increase from the previous year’s figure of $29.8 million. This decline is attributed to a decrease in revenue, which dropped to $27.2 million from $35.3 million in the same period last year.
To address its financial situation, MedMen has been actively selling off assets to generate cash. In January, the company announced its decision to sell its non-core business operations in Arizona and assets in Nevada for a minimum of $24 million in cash, along with $5.5 million in short-term seller notes.
In an effort to navigate through these challenging times, MedMen welcomed Ellen Deutsch as its new chief executive. Deutsch, a former executive at Acreage Holdings Inc. and Hain Celestial Group Inc., brings valuable experience to the table.
However, MedMen’s current struggles can be traced back to six years ago when it reached its peak in the stock market. Despite its rapid growth in California and other markets after its establishment in 2010, MedMen faced a setback in 2018 when its attempt to acquire PharmaCann for $682 million fell through.
Internal issues also contributed to the company’s difficulties. In 2020, one of its co-founders, Adam Bierman, departed from MedMen, sparking a series of legal actions. Eventually, in December 2022, Bierman was awarded a $3.1 million arbitration settlement with MedMen.
More recently, MedMen faced another setback when Ascend Wellness Inc. backed out of a deal to purchase MedMen’s New York business in 2022. Ascend’s decision was aimed at preserving $70 million in cash.
With strong competition from the illicit market in California and a slower-than-expected rollout of the New York market, MedMen continues to face significant challenges. However, the company remains determined to overcome these hurdles and emerge stronger in the ever-evolving cannabis industry.
Also read: MedMen puts New York business on the selling block after Ascend scraps deal
