The unicorn of hashish. The ‘Apple’ retailer of hashish. The nationwide string of shops.
Traders as soon as purchased into the hype round MedMen Enterprises Inc. (OTC: MMNFF), however in the long run, they bought burned like a nasty blunt.
MedMen is now within the technique of winding down, an effort led by Richard Ormond, who’s getting paid $180,000 to shut down properties and promote belongings. Ormond, who was introduced on because the “chief restructuring officer,” is the co-founder and chairman of Ejudicate, which operates as Temporary.com, a web based dispute decision firm, and the principal of Stone Blossom Capital LLC, which gives receivership and restructuring companies to the hashish business.
Ormond didn’t reply to requests for feedback.
The corporate has already shuttered most of its places in California and Chicago. It’s troublesome to know what stays open, as the corporate’s web site has been “down for upkeep” since on Friday, when information of the California closures hit the media.
Who’s been burned?
Gotham Inexperienced
Gotham Inexperienced was one of many greatest believers in MedMen, and the 2 have a protracted historical past.
In March 2019, MedMen signed a binding time period sheet for a senior secured convertible credit score facility of as much as $250 million from funds managed by Gotham Inexperienced Companions. It was one of many largest investments to this point by a single investor in a publicly traded hashish firm with U.S. operations.
At the moment, the inventory was buying and selling at greater than C$4 on the Canadian Securities Alternate and greater than $3 on the OTC Markets.
By July that yr, Gotham Inexperienced Companions and Wicklow Capital dedicated to a $30 million non-brokered financing of Subordinate Voting Shares at a value equal to $2.37 per share.
At this time, Wicklow Capital is listed on Bloomberg as proudly owning 12.16% of the excellent shares. Gotham Inexperienced owns roughly 750 million shares.
Tilray
On Aug. 13, 2021, Tilray Inc. (NASDAQ: TLRY) acquired $165.8 million of senior secured convertible notes and associated warrants issued by MedMen by way of the corporate’s possession curiosity in a restricted partnership.
Tilray’s capacity to transform the convertible be aware, which has a maturity date of Aug. 17, 2028, was dependent upon U.S. federal legalization of hashish, nevertheless it seems to be like MedMen will likely be out of enterprise earlier than that occurs.
Tilray hasn’t written the funding off simply but, nevertheless it has given ample warning to its buyers that this funding will probably not repay.
Hedge Funds
In accordance with Bloomberg and 13F filings with the SEC, a number of hedge funds even have a stake within the collapsing firm.
- Parallax Volatility Advisors owns 31 million shares of MedMen, or 6.25% of the excellent shares.
- Indulge Holdings LLC, which is related to Michael Serruya, a former director of the corporate, regarded to have 19 million shares.
- MM Asset Administration has 697,000 shares.
Past the finaciers
It’s not simply the direct buyers taking successful from MedMen’s demise.
There’s the owner for the corporate’s retailer with the high-priced lease on fifth Avenue in New York Metropolis. In February, Each day Beast wrote that New York actual property mogul Jack Cayre filed a default discover within the New York State Supreme Courtroom demanding cash for unpaid lease to the tune of $1.8 million.
The shop continues to be open, however MedMen didn’t apply for an adult-use license within the state and stays solely a medical operator.
And that landlord isn’t alone.
MJBiz Each day wrote that “one California distributor that’s owed tens of hundreds of {dollars} is planning to file a lawsuit in opposition to the Los Angeles-based firm… Different contractors – some owed upward of 5 figures – are considering authorized motion in opposition to MedMen as effectively.”
What’s subsequent?
The inventory is priced at zero, and not buying and selling. The OTC Markets has given the corporate a double black diamond ranking as a dangerous inventory and quotes aren’t accessible to the general public.
Whereas some imagine the corporate may very well be resurrected by the remaining buyers to guard their investments, the query turns into whether or not anybody within the business would need to work with them.
If a number of distributors are suing to receives a commission for his or her stock, then solely probably the most determined manufacturers will take an opportunity or at minimal ask for money funds upfront.
Sooner or later, these buyers should acknowledge their investments have zero worth. MedMen can have burned even those that believed within the firm.
Disclosure
The statements made regarding these merchandise haven’t been evaluated by the Meals and Drug Administration. The efficacy of these merchandise has not been confirmed by FDA-approved evaluation. These merchandises are normally not meant to diagnose, take care of, treatment, or forestall any sickness. All information discovered proper right here is not going to be meant as another option to or totally different from information from well-being care practitioners. Please search the recommendation of your well-being care expert about potential interactions or totally different attainable points sooner than using any product. The Federal Meals, Drug and Magnificence Act requires this discovery.
