A sequence of hashish shops that was as soon as described because the ‘Apple weed retailer” and valued at $1.7 billion as a public firm, is on the verge of economic collapse, based on a regulatory file.
The corporate, MedMen, stated it was left with solely $15.6 million in money in opposition to $137.4 million in debt.
“The situations described above elevate substantial doubt as to the corporate’s skill to fulfill its obligations for not less than one yr,” the corporate stated in its submitting final week.
MedMen is simply the most recent of hashish darlings face a toll as the economic bubble of 5 years in the past deflates because of extreme debt, falling marijuana costs, competitors from unlawful sellers, and excessive taxes. The fact, as with every retail enterprise, is that opening shops is pricey and taking over debt is dangerous, at the same time as a rising variety of states legalize pot gross sales.
MedMen, based mostly close to Los Angeles, operates 23 shops, together with in California, New York and Illinois. In an effort to chop prices, it bought its shops in Florida final yr, is attempting to promote its New York shops and can also be attempting to renegotiate leases for the remaining shops.
The corporate has already defaulted on a few of its debt, based on the submitting, and must get an extension or refinance it.
In 2018, MedMen went public on the Canada Inventory Trade by means of a reverse merger amid a wave of hashish corporations. At first, its shares reached over $8, however right this moment its shares are buying and selling at solely 4 cents.
Shares of different pot-related corporations additionally suffered because the hashish commerce misplaced traction with traders. The inventory of Tilray Manufacturers, a hashish producer that’s among the many largest corporations within the trade, has fallen greater than 90% from its all-time excessive, for instance, whereas Cover Development, one other main participant, has dropped by the same quantity.
Learn to navigate and construct belief in your online business with The Belief Issue, a weekly e-newsletter analyzing what leaders have to succeed. Register right here.