The chain of marijuana stores that was once described as the ‘Apple of Marijuana Stores’ and was valued at $1.7 billion as a public company, is on the verge of financial collapse, according to a regulatory filing.
The company, MedMen, said it had only $15.6 million in cash versus $137.4 million in debt.
“The situation described above raises doubts about the company’s ability to meet its obligations for at least one year,” the company said in a filing last week.
MedMen is just the latest of the one-time marijuana darlings to face reckoning as the industry bubble five years ago deflates due to excessive debt, falling marijuana prices, competition from illegal sellers, and high taxes. The reality, as with any retail business, is that opening an expensive store and taking on debt is risky—even though many states have legalized the sale of pot.
MedMen, based near Los Angeles, operates 23 stores including in California, New York, and Illinois. In an effort to cut costs, sold the store in Florida last year, tried to sell the New York store, and also tried to renegotiate the lease for the remaining store.
The company has incurred some debt, the filing said, and will need to get an extension or repay it.
In 2018, MedMen went public on the Canadian Stock Exchange through a reverse merger amid a wave of cannabis business. Initially, the stock rose to more than $8, but now the stock is trading at just 4 cents.
Shares in other pot-related companies also suffered as the marijuana business lost luster with investors. Shares of Tilray Brands, a cannabis producer that is among the biggest companies in the industry, are down more than 90% from their all-time high, for example, while Canopy Growth, another major player, is down by the same amount.
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