A chain of cannabis stores that was once described as the “Apple store of weed” and valued as high as $1.7 billion as a public company, is near financial collapse, according to a regulatory filing.
The company, MedMen, said that it has only $15.6 million in cash remaining versus $137.4 million in debt.
“The conditions described above raise substantial doubt with respect to the company’s ability to meet its obligations for at least one year,” the company said in its filing last week.
MedMen is just the latest of the onetime cannabis darlings to face a reckoning as the industry bubble of five years ago deflates due to excessive debt, falling marijuana prices, competition from illegal sellers, and high taxes. The reality, as in any retail business, is that opening stores is expensive and taking on debt is risky—even as an increasing number of stateslegalize pot sales.
MedMen, based near Los Angeles, operates 23 stores including in California, New York, and Illinois. In an effort to cut costs, it sold its stores in Florida last year, is trying to sell its New York stores, and is also attempting to renegotiate leases for the stores that remain.
The company has already defaulted on some of its debt, the filing said, and it needs to obtain an extension or to refinance it.
In 2018, MedMen went public on the Canadian Securities Exchange through a reverse merger amid a wave of cannabis businesses. Early on, its shares rose to over $8, but today its stock trades for just 4 cents.
Shares in other pot-related companies have also suffered as the cannabis business lost its luster with investors. Stock of Tilray Brands, a cannabis producer that is among the industry’s largest companies, is down more than 90% from its all-time high, for example, while Canopy Growth, another major player, is down a similar amount.