Business

The cannabis store that was once worth $1.7 billion is now almost bankrupt


A chain of cannabis stores was once described as ‘Apple weed shop’ and is valued at as much as $1.7 billion as a public company, about to collapse financially, according to a regulatory record.

The company, MedMen, said it had only $15.6 million in cash left against a debt of $137.4 million.

“The conditions described above raise substantial doubt about 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 product of one time cannabis lover faces reckoning as the industrial bubble five years ago deflated due to mounting debt, falling cannabis prices, competition from illegal seller, and high taxes. In fact, like in any retail business, opening stores is expensive and borrowing is risky—even if more and more states legalization sell pot.

MedMen, based near Los Angeles, operates 23 stores including in California, New York and Illinois. In an effort to cut costs, it sold stores in Florida last year, is trying to sell stores in New York and is also trying to renegotiate leases for the remaining stores.

The filing said the company had defaulted on some of its debt and that it needed to be renewed or refinanced.

In 2018, MedMen listed shares on the Canadian Stock Exchange through a reverse merger amid a wave of the cannabis business. In the beginning, its shares rose to more than $8, but today its shares trade for just 4 cents.

Shares of other cannabis-related companies also took a hit as the cannabis business lost its appeal to investors. For example, shares of Tilray Brands, a cannabis producer among the biggest in the industry, have fallen more than 90% from their all-time high, while Canopy Growth, another major player , is also reduced by a similar amount.

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