MedMen, a California chain of cannabis stores once described as the “Apple weed store” and valued at up to $1.7 billion, is on the verge of financial collapse.
The company said it was left with just $15.6 million in cash versus $137.4 million in debt.
“The conditions described above raise significant doubts about the company’s ability to meet its obligations for at least one year,” the company said.
MedMen also noted that “its cash requirements are significant and cannot be met with current cash flows from operations. »
MedMen has faced a long list of challenges, from selling its Florida assets for $16 million less than the original offer to failing to sell its New York assets to multi-operator -Ascend Wellness cannabis states.
MedMen said it would delay new store openings, permanently or temporarily close underperforming stores, and conduct other restructuring activities. The company is still looking for a buyer.
Shares of MedMen (MMEN) were trading at 4 cents on the Canadian Securities Exchange on Tuesday against $8 after its IPO.
The bursting bubble?
MedMen is just the latest of the old cannabis darlings to face a difficult situation, as the industrial bubble of five years ago deflates due to excessive debt, falling prices cannabis, competition from illegal sellers and high taxes.
MedMen, based near Los Angeles, operates 23 stores, including in California, New York and Illinois. In an effort to cut costs, it sold its Florida stores last year, is trying to sell its New York stores and is also trying to renegotiate leases for the remaining stores.
Shares of other cannabis companies have also suffered from the cannabis sector’s loss of glamor with investors. The stock of Tilray Brands, a cannabis producer that is among the biggest companies in the industry, is down more than 90% from its all-time high, for example, while Canopy Growth, another major player, lost an amount similar.
