It was difficult to miss the billboards dotting Los Angeles touting the cannabis retail chain MedMen. Its ubiquitous red logo once seemed to represent a bright future for U.S. recreational sales. Rapidly expanding into Nevada, New York, Arizona, Illinois and Florida, MedMen’s sleek storefronts helped earn the retailer the nickname the “Apple Store of weed.”
Yet, this week, the LA-based retailer, currently ranked #21 in the Global Cannabis 50, announced the chain is nearing insolvency. A grim earnings call issued for the fiscal second quarter ending Dec. 24, 2022, reported a 17% drop in revenue from 2Q 2022 to $29.6 million, for a net loss $14 million — more than doubling its 2Q losses. Once valued as high as $1.7 billion by enthusiastic investors, MedMen announced it has only $15.6 million in cash left and is more than $137 million in the red. It has already defaulted on some of its debt, according to Green Market Report.
The company said in its SEC filing that current finances “raise substantial doubt with respect to the company’s ability to meet its obligations for at least one year.” MedMen’s stock was trading above $6 a share when California legalized adult-use weed 2018, but those shares have plummeted to less than $0.03.
With more than 700 employees, the company has been in a battle to stay afloat by reducing its footprint. It exited Florida in 2022 and has been trying to off-load its New York stores. It recently managed to have a lawsuit withdrawn in Chicago, where MedMen’s landlords claimed the company was nearly million dollars in arrears on rent.
MedMen’s downfall is a further signal that the golden goose embraced by the industry has reached the chopping block. The market continues to be pummeled by taxes, regulation compliance, falling prices and the black market — all with the risky bet of cannabis’ illegal federal status still lurking in the shadows.
Read MedMen’s full statement here.