MedMen goes from height of $3 billion valuation to zero as stock draws cease-trade order and top execs leave

By Steve Gelsi and Bill Peters

Once hailed as the first cannabis unicorn, MedMen's fortunes have gone up in smoke

U.S. cannabis retailer MedMen Enterprises Inc. on Wednesday said its chief executive and executive chairman had resigned, not long after the stock drew a cease-trade order, as the once high-flying cannabis retailer dropped from a $3 billion valuation in 2018 to zero.

The company, in a brief statement on Wednesday, said Ellen Deutsch Harrison had left the role of chief executive and board member on Friday. Michael Serruya, the board's executive chairman, stepped down on Wednesday, after serving since 2021.

MedMen also said its board had appointed Richard Ormond as chief restructuring officer.

The move follows years of executive shakeups at the company. The departure for Harrison - a former Acreage Holdings Inc. (ACRHF) and Hain Celestial Group Inc. (HAIN) executive - comes not long after she took on the role in July. MedMen said in a filing on Wednesday that the exits of Harrison and Serruya were "not the result of any disagreements with the company on any matter related to the operations, policies, or practices of the company."

Back in 2018, when California's recreational pot market was gearing up, MedMen Enterprises (MMNFF) drew attention for its open-plan dispensaries, furnished with display tables showcasing edibles, buds and vapes and outfitted with touchscreen tablets. The company opened its flagship store in Midtown Manhattan's upscale 5th Avenue to sell medical cannabis on April 20 of that year.

But losses piled up. And so did questions about executive compensation, legal battles, layoffs and stiff competition - from the legal market and the illicit one.

MedMen's stock hit an all-time closing high of $6.94 on Oct. 16, 2018, with a market cap of $3 billion. But on Jan. 12, the stock fell to $0.0006, a tiny fraction of a penny. On Wednesday, the stock's value was listed at $0.0000, according to MarketWatch data.

MedMen was notified on Jan. 11 by the OTC Markets Group Inc. that the company's shares have been moved to the OTC Expert Market from the OTCQB market because it has yet to file a 2023 annual report or a 10-Q for the quarter ending Sept 30, the company said in a filing.

MedMen said it intends to reapply to the OTCQB once it files the reports with the Securities and Exchange Commission, according to the filing.

The OTC currently has a warning message attached to MedMen stock due to its current status as eligible for unsolicited quotes only.

On Jan. 5, 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 filing.

MedMen said on Dec. 21 it did not know when it would complete the filings. MedMen did not respond to a request for comment Wednesday.

In a May filing, MedMen listed total liabilities of about $573 million, and a shareholder deficit of about $357 million.

Its net loss for the three months ended March 25 increased to $31.5 million from $29.8 million in the year-ago quarter, as revenue fell to $27.2 million from $35.3 million in the year-ago period.

The company's latest difficulties have arrived in the face of strong competition from the illicit market in California, a slower-than-expected rollout of the New York market and other challenges.

But problems started surfacing six years ago, when the stock was at its height. After being founded in 2010 and quickly growing in California and other markets, MedMen, based in Los Angeles, failed in 2018 in its bid to acquire PharmaCann in a $682 million all-stock deal.

Meanwhile, one of its co-founders, Adam Bierman, left the company in 2020 in a move that sparked a flurry of legal actions. In December of 2022, Bierman won a $3.1 million arbitration settlement with MedMen. Other problems arose when Ascend Wellness Inc. (AAWH) backed out of a deal to buy MedMen's New York business in 2022 in a move to preserve $70 million in cash.

MedMen has also been selling assets to raise cash. The company this month said that it sold off its non-core business operations in Arizona. Plans to sell two cannabis shops in Nevada await approval from regulators.

Also read: MedMen puts New York business on selling block after Ascend scraps deal

-Steve Gelsi -Bill Peters

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01-24-24 1823ET

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