MedMen's Epic Bankruptcy: The Bigger They Come ($1.7B), The Harder They Fall

Was anyone surprised that MedMen declared bankruptcy in Canada last week? The hundreds of laid-off workers, thousands of investors, stiffed landlords and suppliers, no doubt, had a few clues.

The California cannabis chain, with its ostentatious red awning on the outside and looking like the corporate clone of a French perfume shop on the inside, which likely earned it the "Apple Store of weed" appellation, made the bankruptcy announcement this past Friday.

Here Are A Few Hints

Once celebrated as a cannabis industry titan valued as high as $1.7 billion as a public company, MedMen was near financial collapse over a year ago according to a December 2022 regulatory filing with the Securities and Exchange Commission when it showed only $15.6 million in cash versus $137.4 million in debt.

Then, shortly thereafter, store closures and inventory clearance followed in California, amid severed ties with major brands over nonpayment issues. Landlords clamored for back rent. Underscoring the tumult, C-suite and board members also began jumping ship, noted Green Market Report.

Dramatic Fall From Grace

The now-broke, self-proclaimed unicorn of the cannabis industry has assets worth $1 dollar (you read that right – a dollar) and $410 million in liabilities according to the Creditors Package in the company's bankruptcy documents. Obviously, MedMen’s shares, dormant for weeks, are poised for delisting following its breathless downward spiral in 2024, at the beginning of which time the OTC Marketplace downgraded the company to zero value in January.

What Went Wrong?

The shortest, kindest and the most obvious answer likely has to do with the company's rapid expansion fueled by the initial euphoria of the 2018 legalization of cannabis in California. As has been, still is, the case across the country, legalization is just the first step that soon tends to collide with the complicated realities of an industry fraught with regulatory hurdles, high taxes and endlessly encumbered by federal law. Despite MedMen’s early success, it also faced numerous challenges in the form of legal battles, failed acquisitions and competition from both the legal and illicit cannabis markets.

MedMen's now complete demise serves as a cautionary tale in an evolving cannabis landscape where the rug, once it starts to fray, can fall apart at any moment.

Courtesy photo