MedMen Sued For Almost $1 Million in Unpaid Back Rent

Thor Equities must be seeing red whenever a cannabis company wants to rent one of its spaces. The real estate company has sued the High Times group in San Francisco for not paying rent on space and now it is going after MedMen  (OTC: MMNFF) for the same thing. In a complaint filed on July 15, 2022, Thor Equities claims MedMen owes the company $950,960.02 in unpaid rent for 942-944 West Fulton Street, Chicago, Illinois 60611. The lease was signed June 28, 2019, and Thor says MedMen hasn’t paid any rent since August 2021.

The complaint states, “For each month from August 2021 to the present, Tenant was required to pay Landlord base rent of $70,726.67, operating costs of $2,666.67, and insurance costs of $556.29. The monthly real estate charge of $4,429.26, in effect in August 2021 through March 2022, increased to $5,014.59 in April 2022.” The leaseholder is technically MM Enterprises USA LLC. In addition to that, MedMen’s guarantor is MedMen Enterprises Inc. which agreed to pay if MedMen didn’t have also ditched the landlords and not paid the rent.

According to Thor, MedMen owes the principal amount for the past 11 months of $864,509.11.and late fees of 10% of that amount, or $86,450.91.

Not So Fast

The judge in the case wasn’t so easily moved and basically went back to Thor and asked the company to tidy up its complaint. U.S. District Judge J. Paul Oetken wrote in his order that Thor Equities Group needs to do more than simply identify the “principal place of business” of MedMen. “The principal place of business and state of registration of a limited liability company are not relevant to the question of diversity of citizenship,” the judge said. “Rather, for purposes of diversity jurisdiction, an LLC has the citizenship of each of its members. Thus, in order to invoke this Court’s diversity jurisdiction, plaintiff must allege that the citizenship of each member of the LLC.”

The judge sent them back to the drawing board writing, “Plaintiff shall, on or before July 28, 2022, either (1) show cause as to why its complaint should not be dismissed for lack of subject matter jurisdiction, or (2) move to file an amended complaint that properly pleads jurisdiction.”

MedMen does have a dispensary in Chicago, but it’s not on Fulton St, instead, it’s at 1142 Lake St, located in Oak Park IL. The Chicago Tribune reported in 2020 that MedMen was considering a different location at  1001 W. North Ave.

Bad Tenants

Cannabis companies are learning they are on the hook for lease agreements. Thor won a case against High Times for not paying back rent in San Francisco. Harvest sold a dispensary license to High Times that came saddled with a super high rent payment in a tony retail section in San Francisco. The dispensary was never opened, but that didn’t matter. A contract is a contract.

Scaling Down

In this case, MedMen is likely pleased to have a little breathing room since the Judge bounced the complaint and asked Thor to Fix its language. MedMen has been scaling back on its big plans. the company has sold some Florida assets and recently settled its case with Ascend Wellness to sell its New York properties.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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