Still, the California-based multistate operator is facing major headwinds and remains a going concern, according to its latest quarterly earnings report for its fiscal 2023 third quarter.
“As of March 25, 2023, the Company had cash and cash equivalents of $7.6 million and working capital deficit of $383.2 million,” MedMen reported, adding that net losses were $31.2 million for the quarter and $70.6 million from continuing operations for the first nine months of the fiscal year.
Including discontinued operations, MedMen’s net loss for 2023 so far is $48.4 million, down from the $111 million it had lost in the first three quarters of fiscal 2022.
The company plans to keep operations running through various cost-cutting measures, up to and perhaps “including the potential divesture of one or more of its non-core states,” such as Arizona, Nevada, Massachusetts, or Illinois. MedMen currently has 23 dispensaries in six states, with the bulk located in California.
“The Company has been in active ongoing discussions with interested parties for the potential dispositions of its retail stores in Emeryville, California; Fenway, Massachusetts; and Nevada, as well as its retail stores and cultivation facility in Arizona,” MedMen reported.
It also noted that its New York assets have been – and are still – up for sale, and that it closed on the sale of its Florida assets last year for $67 million, which allowed it to repay one of its debtors – Hankey Capital – to the tune of $31.6 million.
MedMen has also been trying to stave off various lawsuits, including from landlords in California, Florida, Illinois, and New York demanding unpaid back rent, another sign of financial distress. Those cases have had mixed results thus far.
In addition, MedMen acknowledged that it will have to renegotiate the terms of some of its debt and repayment plans in order to remain solvent.
MedMen’s financial issues, the company said, date back years to management decisions that were based on “the assumption of (imminent) federal legalization of cannabis, and (are) not achievable under the current macro-economic conditions impacting our cash flow from operations.”
“The conditions described above raise substantial doubt with respect to the Company’s ability to meet its obligations for at least one year … and therefore, to continue as a going concern,” MedMen reported.