US cannabis giant MedMen 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 high-flying MSO (multi-state operator) announced that it filed for bankruptcy under Canada’s Bankruptcy and Insolvency Act, and that all of its directors had resigned with immediate effect, following the resignation of its CFO in February.
Additionally, on April 23, 2024, MedMen’s subsidiary, MM CAN USA, based in California, was placed into receivership in the Los Angeles Superior Court to dissolve and liquidate its assets.
The company’s Chief Restructuring Officer resigned and was appointed as the Receiver of MM CAN USA. Similar receivership proceedings are expected to occur in other US states where the subsidiary operates.
It comes just six years after the company’s IPO, seeing the value of the company peak at $3bn in the following months. The company now leaves behind over $400m 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 branches across California, Nevada, Illinois, Massachusetts, and New York, taking on significant debt in the process.
In 2019, the company attempted to finalise a $682m merger with PharmaCann, which eventually fell apart due to anti-trust concerns, leaving the company struggling to repay its creditors.
Scandals continued to follow the business, seeing its founder, Sam Bierman, ousted in 2020 amid allegations of misuse of company funds. Further legal battles, accusations of racism, and increasing competition from the legal and illegal cannabis markets have plagued MedMen during its fall from grace.
Since its peak, the company’s stock price has fallen by over 90%, and all but two of its stores have now closed.
“The difficult decision to shut down operations and commence the bankruptcy proceedings and receivership proceedings was made after careful consideration of the current financial condition of the company and its subsidiaries, their inability to pay their liabilities as they become due and the anticipated enforcement actions of secured creditors,” the company said in a press release.
“After careful consideration of these factors and in the absence of other available alternatives, the board of directors of the company determined that it was in the best interests of the company to proceed with the commencement of the bankruptcy proceedings and receivership proceedings.”
