Cannabis company MedMen files for bankruptcy with about $411 million in liabilities, as its fortunes go up in smoke

By Steve Gelsi

Once hailed as the unicorn of pot, MedMen files for bankruptcy in Canada with plans to liquidate its assets

The formerly high-flying cannabis company MedMen Enterprises Inc. filed for bankruptcy protection late Friday with about C$561.5 million ($411 million) in liabilities.

The filing comes about five years after MedMen's market valuation peaked at about $3 billion as California's legal recreational marijuana business started to gear up.

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

MedMen (MMNFF) said the decision to file for bankruptcy was difficult but necessary "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," according to a statement.

The company named B. Riley Farber, a unit of B. Riley Financial Inc. (RILY), as its bankruptcy trustee and said it was shutting down operations with plans to liquidate.

The company's California-based subsidiary MM CAN USA Inc. was placed into receivership in Los Angeles Superior Court as part of the process to liquidate its assets there.

Other bankruptcy proceeds will be pursued in other states where MM CAN USA Inc. controls or owns assets. MedMen has had a store on Fifth Avenue in New York City for several years and has also had a presence in in Nevada, Illinois and Massachusetts.

"The operations and assets of MedMen's subsidiaries will be dissolved or liquidated pursuant to applicable laws in the U.S.," the company said in a statement.

The company has scheduled a May 14 meeting of creditors.

MedMen Chief Financial Officer Amit Pandey resigned on Feb. 13, followed by each of the company's directors, all prior to the bankruptcy filing.

In its better days, MedMen Enterprises 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 to sell medical cannabis on April 20, 2018.

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

In 2021, Tilray Inc. (TLRY) and other investors revealed plans to buy about $166 million in convertible MedMen debt and warrants held by Gotham Green Partners.

The notes were to convert to a roughly 26% stake of MedMen shares, contingent upon U.S. legalization of cannabis. At the time, the maturity date for the debt was set at Aug. 16, 2028.

Tilray's investment in MedMen was made through a noncontrolling interest in Superhero Acquisition LP, which is currently "taking action to maximize the value of its interest in one of the most recognized consumer brands in the global cannabis market," according to a statement from Tilray.

Superhero is "actively working to maximize the value of its MedMen collateral," including profitable stores, operating assets and intellectual property, the statement said.

Tilray's stock fell fractionally on Monday.

While MedMen spent heavily to position itself for a boom in legal cannabis sales, it ran into competition not only from other licensed cannabis sellers, but also from the unregulated markets in New York and California.

Bill Peters contributed.

-Steve Gelsi

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04-29-24 1307ET

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