MedMen Archives - Green Market Report

Video StaffVideo StaffOctober 11, 2019

3min5380

This is your marijuana money minute for the week ending October 11 from the New West Media in San Francisco. Wow, what a crazy week to see things blow up and more carnage in the cannabis industry. 

Where to start?

MedMen announced it decided to terminate the deal with PharmaCann that had been valued at $684 million. MedMen said it wants to focus more on its California market and go deeper into its strengths. As a consolation prize, Medmen gets PharmaCann’s Illinois licenses as part of the termination fee. Of course, MedMen has been touting its proforma numbers with Pharmacann and so now those have to be dialed back.

Speaking of dialing back, HEXO Corp said that its previously projected revenues were a bit lofty. The company said it had to reduce its revenue estimates to a range of $46-$48 million for the year, significantly lower than the $400 million it said it would do in 2020. That stock got spanked hard.

The Green Organic Dutchman said that it was considering new financing to complete the construction of two of its facilities. The only problem with that is that on previous investment decks, TGOD claimed that their projects were fully funded. The company also says it has $50 million in cash. How much money d they possibly need if they are only weeks away from completion. The stock lost 40% of its value in 2 days. 

More divorce news.

Aleafia said it was no longer going to buy cannabis from Aphria saying Aphria failed to meet its supply obligations. Aphria seemed to toss it off and said they would still achieve net positive income for this past quarter. To make things more awkward, Aphria owns a lot of Aleafia stock.

And then finally, two Russian nationals were arrested for campaign finance violations this week and it turns out that they had applied for marijuana licenses in Nevada. They didn’t get them because they were late by 2 months.


StaffStaffOctober 8, 2019
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7min1910

It’s time for your Daily Hit of cannabis financial news for October 8, 2019.

On The Site

MedMen

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) and PharmaCann, LLC made a big deal back in December of 2018 that MedMen would buy PharmaCann in an all-stock transaction. That deal, once valued at $684 million, is now off. MedMen is now saying that it will focus on leveraging its retail brand, its leadership position in California and its digital platform to grow the business will create greater shareholder value than the completion of the transaction.

The company also took this moment to announce that Zeeshan Hyder has been appointed Chief Financial Officer at MedMen. Mr. Hyder, currently MedMen’s Chief Corporate Development Officer, has been an integral part of the leadership team at MedMen since 2017, overseeing corporate development, investor relations and other financial growth initiatives. To date, Mr. Hyder has led over $300M in M&A deals executed, partnered with the CEO to take the company public and raised $500M in capital for direct investment into the business.

Hyder succeeds Michael Kramer, who apparently was terminated as of October 7, 2019. Kramer was only just hired in December of 2018 and he followed the previous CFO James Parker who only lasted a year and half and is currently suing Medmen for breach of contract.

Aleafia Health

Aleafia Health Inc. (TSX: ALEF)(OTC: ALEAF) has terminated its deal to buy cannabis from Aphria Inc. (TSX: APHA)(NYSE: APHA) saying Aphria failed to meet its supply obligations. The deal that was agreed to on September 11, 2018 said that Aphria would provide up to 175,000 kg equivalents of cannabis products over an initial five-year term, commencing May 1, 2019. Aleafia said the termination should not affect the company. A few weeks ago, Aleafia told the market on Tuesday that it will achieve positive net income for the quarter ending September 30, 2019. The company also stated that it had $51 million in cash on hand.

Aphria released a statement saying, “We are disappointed that Aleafia has chosen to terminate its Agreement with Aphria Inc. The Company had every intention of fulfilling its obligations under the Agreement. As a large shareholder of Aleafia, Aphria made good faith efforts to ensure the continuation of the Agreement understanding it was in the best interest of all parties involved. However, the termination of this legacy Agreement frees up significant supply allowing the Company to service its brands that are in high-demand across the country.”

In Other News

Target Group Inc (OTCQB: CBDY) announced that its wholly-owned subsidiary, Canary RX Inc (“Canary”), has been granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). Strategically located just outside of Toronto, ON, Canary RX will begin cultivating cannabis in its 44,000 square foot facility, producing 3600 kilograms annually.

The Supreme Cannabis Company, Inc.  (TSX: FIRE) (OTCQX: SPRWF) announced that Blissco Cannabis Corp., Supreme Cannabis’ premium wellness brand and a multi-licensed processor and distributor, has received licensing approval from Health Canada for the sale of cannabis oils from its facility in Langley, British Columbia.

 

 


Debra BorchardtDebra BorchardtOctober 8, 2019
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4min4990

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) and PharmaCann, LLC made a big deal back in December of 2018 that MedMen would buy PharmaCann in an all-stock transaction. That deal, once valued at $684 million, is now off. MedMen is now saying that it will focus on leveraging its retail brand, its leadership position in California and its digital platform to grow the business will create greater shareholder value than the completion of the transaction.

The company said in a statement, “In connection with the termination, PharmaCann has agreed to transfer certain cannabis licenses and related assets in Illinois and Virginia to MedMen for no additional consideration from MedMen, other than the forgiveness of certain debt.” Basically, to cover the termination fee PharmaCann is giving up four assets:

  • Operational cultivation and production facility in Hillcrest, Illinois
  • Retail location in Evanston, Illinois
  • Retail license for Greater Chicago, Illinois
  • License for vertically integrated facility in Virginia

“The cannabis sector has evolved tremendously since we first announced the PharmaCann transaction and based on the current macro-environment and future opportunities that exist for our business, we believe it is now in the best interest of our shareholders to deepen, rather than widen, our Company’s reach,” said Adam Bierman, MedMen co-founder and chief executive officer. “Looking at the PharmaCann portfolio today, Illinois has emerged as the most attractive opportunity for our longer-term, strategic growth plan. The addition of those assets, without dilution, is a win for MedMen and our shareholders.”

Four Weeks Ago It Was A ‘Transformative’ Deal

Just a few weeks ago Bierman was crowing about the PharmaCann acquisition and suggesting it was still moving forward. On September 10, he said, “Our transformative acquisition of PharmaCann will mold us into an even bigger and bolder company for our consumers. This acquisition doubles the number of states where MedMen has licenses, extending our geographic footprint and creating tremendous opportunity for our company and our shareholders. We are excited to be one step closer to closing the acquisition.”

On March 15, 2019, pursuant to the HSR Act, MedMen and PharmaCann each received a request for additional information from the U.S. Department of Justice Antitrust Division. On August 9, 2019, both MedMen and PharmaCann declared substantial compliance with this Second Request. On September 9, 2019, the waiting period under the HSR Act, which extended automatically for 30 days following both companies declaring substantial compliance with the Second Request, expired. That was when MedMen declared it had  green light to complete the deal.

New CFO For MedMen

The company also took this moment to announce that Zeeshan Hyder has been appointed Chief Financial Officer at MedMen. Mr. Hyder, currently MedMen’s Chief Corporate Development Officer, has been an integral part of the leadership team at MedMen since 2017, overseeing corporate development, investor relations and other financial growth initiatives. To date, Mr. Hyder has led over $300M in M&A deals executed, partnered with the CEO to take the company public and raised $500M in capital for direct investment into the business.

Hyder succeeds Michael Kramer, who apparently was terminated as of October 7, 2019. Kramer was only just hired in December of 2018 and he followed the previous CFO James Parker who only lasted a year and half and is currently suing Medmen for breach of contract.

MedMen stock was lately trading at $1.72, down from its 52-week high of $7.57.


William SumnerWilliam SumnerSeptember 10, 2019
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4min2260

It’s time for your Daily Hit of cannabis financial news for September 10, 2019.

On the Site

Canndescent

Private premium cannabis company Canndescent announced that it closes on a $27.5 million in Series C Preferred Funding. Leading the investment round, Green Acre Capital, a cannabis-specific venture fund from Canada, was joined by Carnegie Arch Capital, Senterra, LLC., Altitude Investment Management, JW Asset Management and a multinational beer company from Asia. The money will be used for the company’s expansion into vapes and ingestibles as well as supporting efforts in Massachusetts, Nevada, Canada and beyond.

Dissect the Economics of Cannabis Branding at the Green Market Summit

On September 11th, 2019, investors, entrepreneurs, and branding experts will gather to dissect the economics of cannabis business brands at The Green Market Summit in Los Angeles, California. Following a sold-out event in Chicago, The Green Market Summit will bring its business acumen to the world of cannabis branding and provide exclusive industry information on topics such as the celebrity effect on cannabis, how to manage brand perception for public companies, and the world of luxury cannabis.

In Other News

MedMen

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced that the waiting period stipulated by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended has expired in relation to the company’s proposes acquisition of PharmaCann LLC. The waiting period was one of several conditions needs to close the acquisition, and the deal is expected to close by the end of 2019. “Today marks a monumental day for the cannabis industry,” said Adam Bierman, MedMen co-founder and CEO. “We hope this will pave the way for other companies in what has become a highly acquisitive and dynamic industry.”

Sunniva

Sunniva Inc. (CSE: SNN) announced that it has entered into an agreement to sell its subsidiary Natural Health Services, Ltd.  (NHS) to The Clinic Network Canada, Inc. (TCNC) for C$9 million. Half of the purchase price will be paid in cash, while the other half will be paid through the issuance of 4.5 million shares of TCNC. The closing of the sale could not have come at a better time for Sunniva, as yesterday,  NHS was named in a class action lawsuit in connection with a previously reported privacy breach of the Electronic Medical Record system used by NHS.


Debra BorchardtDebra BorchardtAugust 13, 2019
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5min3880

Beleaguered California cannabis company MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced unaudited revenue figures for the fiscal fourth quarter of 2019, ending on June 29, 2019. The company did not release any information as to net income or losses and considering each quarter the net losses have been extremely high, the lack of this information could be a red flag.

Systemwide revenue across MedMen’s operations in California, Nevada, New York, Arizona, and Illinois, excluding pending acquisitions, rose 15% sequentially to US$42.0 million. The company reported that gross margins were 50%, compared to 51% in the previous quarter. Pro forma systemwide revenue, which includes pending acquisitions that have not yet closed, totaled US$61.3 million. The company defined the pro forma as 37 retail stores that were operational at the end of the quarter and includes the recently announced pending acquisitions of operational retailers in Long Beach, California, and Vallejo, California.

“Q4 2019 was another quarter of solid execution for MedMen and a very strong end to our fiscal year,” said Adam Bierman, MedMen co-founder and chief executive officer. “Throughout 2019, we broadened our geographic footprint through strategic acquisitions, which leverage our existing corporate infrastructure as we enter new markets. Following the closing of pending acquisitions, we will be licensed for up to 92 retail locations across 12 states, and there is tremendous opportunity ahead to turn the balance of our retail licenses into revenue-generating storefronts.”

Conversion Price Dropped

In March, MedMen announced a $250 million senior secured credit facility arranged by Gotham Green Partners. At that time the conversion price for the shares was $3.10. Since the stock has dropped as a result of numerous negative headline, the conversion price was lowered to $2.55 for the first Tranche. The second Tranche conversion price has dropped to $2.17.

The second Tranche was expected to be for $75 million and that has dropped to $50 million. “The gross proceeds from the Equity Placement together with the remaining financing commitment under the Facility total US$155 million.” So, it is no longer $250 million. MedMen stock was lately trading at $2.10.

PharmaCann Update

Last December, MedMen said that is was going to buy PharmaCann, one of the largest vertically-integrated multistate cannabis operators in the U.S. The FTC questioned that acquisition as part of its anti-trust oversight. MedMen said both it and PharmCann have provided all the requested information and still hope the deal will close by the end of 2019. “PharmaCann equityholders are expected to receive approximately 168.4 million subordinate voting shares in the combined company, based on MedMen’s fully-diluted shares outstanding as of June 29, 2019.” So far New York State has not approved of the MedMen acquisition of PharmaCann.

Expense Reduction

MedMen has been criticized in the past for its extremely high expenses. The lawsuit filed by the company’s former Chief Financial Officer James Parker detailed numerous unusual corporate expenses that disturbed shareholders. Now the company says that it expects to significantly surpass the targeted 20% reduction in its corporate SG&A expenses from its quarter ending December 2018, which totaled $164 million on an annualized basis. MedMen said it is now on track to reduce its run-rate corporate SG&A expenses by 30% by the end of the September 2019 quarter, or to approximately $115 million on an annualized basis going forward. Key drivers of this continued decrease in corporate SG&A expenses include i) general corporate cost savings, ii) strategic headcount reductions across various departments and iii) elimination of non-core functions and overhead in various departments.

 

 


Debra BorchardtDebra BorchardtJuly 10, 2019
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3min3910

Gotham Green Partners, with participation from Wicklow Capital, has agreed to an additional $30 million in an equity commitment to MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF), bringing the total financing commitment to $280 million. To date, Gotham Green Partners has funded $100 million of the total commitment.

MedMen said that it has signed a binding term sheet in respect of certain amendments to the definitive agreements for the up to $250 million senior secured convertible credit facility led by Gotham Green Partners, an investor in the global cannabis industry.

The terms were amended to reflect the drop in the company’s share price.  “Pursuant to Tranche 1 of the Facility will be changed from $3.29 to $2.55, which represents a 12% premium over the Company’s 20 trading day VWAP as of July 8, 2019.” In addition, Gotham Green Partners and Wicklow Capital have committed to a $30 million non-brokered financing of Subordinate Voting Shares at a price equal to $2.37 per share. The Equity Placement is conditional upon the satisfaction of customary conditions, including but not limited to the receipt of all necessary approvals. MedMen shares were lately trading at $2.53, up from the 52-week low of $1.88, but well below the year’s high of $7.57.

“Both Gotham Green and Wicklow have shown continued confidence in our strategy and recognize the potential ahead,” said Adam Bierman, MedMen co-founder, and CEO.

According to the company statement, the increased financing commitment will primarily be used to:

  • operationalize the balance of the company’s retail licenses; the company is licensed for up to 86 retail stores across the U.S., of which 37 are operational today (including the footprint to be acquired through pending acquisitions, subject to customary regulatory approvals);
  • focus on strategic markets, such as Illinois, where the company anticipates 10 stores after the state transitions from a medical to adult use market in 2020 and pending regulatory approvals associated with the PharmaCann acquisition;
  • continue expanding the retail presence in Florida, where the company expects to open 11 additional stores in 2019;
  • remain opportunistic with respect to selective growth initiatives such as expanding the Company’s retail footprint and investing in its delivery and loyalty platforms and
  • strengthen the company’s balance sheet

“MedMen’s strategy, brand, and performance makes them the clear leader of cannabis retail in the U.S. and we are supportive of management’s vision and plan for growth and profitability,” said Jason Adler, managing member of Gotham Green Partners. “As their primary capital partner, we will continue to support the Company as they bring their iconic brand to new markets.”


StaffStaffApril 22, 2019
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7min20950

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) stock fell over 5% to lately trade at $2.86 as more top executives leave the company amid mounting lawsuits. On Friday it was announced that Ben Cook, Chief Operating Officer, and Lisa Sergi, General Counsel and a member of the MedMen Board of Directors both resigned.

“We appreciate the contributions of all current and former MedMen team members as we work to build the world’s leading cannabis company, and I have the utmost confidence in the management team. Their expertise, skill set, and experience set the standard of excellence for the industry,” said Adam Bierman, MedMen CEO.

The company said in a statement that the leaders of the operations group will now report directly to Bierman. The leaders of the legal team include Dan Edwards, who will continue in his role of Senior Vice President of Legal Affairs, and report directly to the CEO.

In addition to those departures, Senior Vice President of Corporate Communications Daniel Yi has also resigned. Yi has been with the company since 2016, but his resignation wasn’t mentioned in the press release. Also, during its fiscal quarter ending March 30, 2019 MedMen named Ryan Lissack Chief Technology Officer. Mr. Lissack is a seasoned technology executive with over 20 years of experience.

Lawsuits

Of course, this follows the very high profile resignation of Chief Financial Officer James Parker, not long after the company went public. Parker followed that action with a lawsuit alleging numerous misdeeds at the company including disparaging remarks by the Bierman, inappropriate spending and serious accusations of improper actions regarding the stocks purchases and mortgage applications.  Michael Kramer is the new CFO. Kramer worked previously in senior jobs for retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.

MedMen is facing another lawsuit from Brent Cox and Omar Mangalji founders of The Inception Companies founders (through an affiliated entity – MMMG-MC, Inc. – that holds a significant stake in MedMen’s management company MMMG, LLC). The two filed a complaint against Adam Bierman; Andrew Modlin and various MedMen Enterprises (OTC: MMNFF) entities for alleged breaches of fiduciary duty. A Los Angeles Superior Court though denied a request from the plaintiffs for a temporary restraining order and a preliminary injunction and giving the company a slight early victory.

However, similar to Parkers claims that Bierman and Modlin are self-dealing when it comes to the company, Cox and Mangali also stated, “MedMen veneer is a complex web of interconnected subsidiary entities, virtually all of which are directly managed, directed, controlled, and owned by BIERMAN and MODLIN, and all of which always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity. It is that perverse interconnectedness and rampant, brazen self -dealing that renders the actions of BIERMAN and MODLIN, and of the Entity Defendants, unlawful.”

In the company filing, it also describes a legal claim filed against the company relating to a financial transaction and seeking damages of approximately $3.5 million. “The claim is at a very early stage and the Company believes that it has no merit. As a result, no amount has been set up for potential damages in these financial statements.”

Stock Inquiries

Just last month MedMen acknowledged in a statement that the OTC Markets had made inquiries about promotional activity relating to promotional materials encouraging investors to buy the company’s Class B Subordinate Voting Shares. The company made a statement claiming it wasn’t aware of stock promotion activity by a company it hired for public relations. Yet in the statement, the company admits “There are statements made which encourage investors to purchase the stock of the Company.”

MedMen said at the time that it “is committed to compliance with the OTC Markets Group Policy on Stock Promotion and the OTCQX Standards and Canadian securities laws. The Company does not condone the use of sensational language to describe the Company’s business prospects or the growth potential of the Company’s industry. The Company does not condone any statements made regarding urgency to invest in the Company’s stock or any other similar statements. Going forward, the Company will affirmatively prohibit all third-party service providers from including such statements in any investor relations or promotional materials respecting the Company.”

Financials

It seems the market is whispering about the company’s financial state. Last week, MedMen announced unaudited systemwide revenue for its fiscal 2019 third quarter ended March 30, 2019. The systemwide revenue was $36.6 million (CA$48.8 million). The company is expected to post its fiscal 2019 third-quarter results in May 2019 and nothing other than revenue was mentioned in the press release which was intended to soothe investors fears.  In the fourth quarter, the gross profits only reached $16 million, while its expenses hit a whopping $77 million. At the end of 2018, MedMen noted that its current liabilities had reached $87 million.

Basically, the company has taken on a lot of debt with the anticipation of big cannabis sales. However, the sky-high expenses are eating away at what revenue is coming in. The debt is going to have to be paid back at some point, but will the revenue coming in be enough to keep up?

 

 

 

 


Debra BorchardtDebra BorchardtMarch 22, 2019
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6min10210

MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF)  has signed a binding term sheet for a senior secured convertible credit facility of up to $250 million from funds managed by cannabis investor Gotham Green Partners.  MedMen said that it thinks this is the largest investment to date by a single investor in a publicly traded cannabis company with U.S. operations.

The investment from GGP will be in the form of convertible senior secured notes issued by MM CAN USA, Inc., a subsidiary of the company, totaling up to $250 million on a private placement. MedMen will receive the investment in three tranches assuming the company achieves certain price thresholds and other conditions. The first tranche is for $100 million, with the second tranche of $150 million delivered in two chunks of $75 million. That second investment will be made available at the six-month mark of the closing date and the third six months following the second.

“This strategic partnership with Gotham Green Partners represents another key milestone for MedMen and stems from our long-standing relationship with The Cronos Group and GGP’s brand portfolio,” said Adam Bierman, CEO of MedMen. “The growth capital will be used to operationalize the balance of our footprint and we look forward to creating further alignment with GGP and their global cannabis platform.”

The company said it plans to use the money from drawdowns on the facility for the following purposes:

  • Operationalize existing retail licenses, with a focus on Florida, where the Company is licensed for 30 stores
  • Integrate assets acquired through pending transactions, including those related to PharmaCann, LLC
  • Accelerate geographic expansion through bolt-on acquisitions and investments in core markets
  • Support national roll-out of higher-margin in-house branded products
  • Continue to invest in technology and digital infrastructure, with a focus on delivery and loyalty programs
  • Consolidate the supply chain and enhance margins by ramping up cultivation and production capabilities

“We continue to be impressed with MedMen’s industry-leading retail execution and iconic branding. With MedMen’s fortified balance sheet, the Company’s future has never been brighter,” said Jason Adler, managing member of GGP. “We feel fortunate to have the opportunity to take such a significant stake in MedMen and begin to work actively with the management team and the board to help the Company achieve its goals.”

Payback

The statement outlined how MedMen will pay back the investment:

All Notes will have a maturity date of 36 months from the closing date (“Maturity Date”), with a 12-month extension feature available to the Company on certain conditions, including payment of an extension fee. Notes will bear interest from their date of issue at LIBOR + 6.0% per annum. During the first 12 months, interest may be paid-in-kind at the company’s option such that any amount of PIK interest will be added to the outstanding principal of the Notes. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Notes prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter.

All or a portion of the Notes will be convertible, at the option of the holder, into class B subordinate voting shares of the company at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The conversion price of each tranche of Notes is as follows:

i) for Tranche I Notes, the conversion price will be equal to 115% of the lesser of  (a) US$3.10, which represents the closing price of the Subordinate Voting Shares on the Canadian Securities Exchange on the trading day immediately preceding the announcement of the Facility, and (b) the closing price of the Subordinate Voting Shares on the trading day immediately preceding the closing date; and

ii) for Tranche II and Tranche III Notes, the conversion price will be equal to the lesser of (a) 115% of the 20 trading day volume weighted average trading price of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of such tranche, and (b) US$7.00.

The company may force the conversion of up to 75% of the then outstanding Notes at the applicable conversion price(s) if the volume weighted average trading price of the Subordinate Voting Shares (translated to US dollars) is US$8.00 for any 20 consecutive trading day period. If 75% of the then outstanding Notes are converted by the company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months.


Debra BorchardtDebra BorchardtMarch 5, 2019
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4min9631

Following the market close on Monday, MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) made a statement claiming it wasn’t aware of stock promotion activity by a company it hired for public relations. Yet in the statement, the company admits “There are statements made which encourage investors to purchase the stock of the Company.”

MedMen acknowledged in the statement that the OTC Markets had made inquiries about promotional activity relating to promotional materials encouraging investors to buy the company’s Class B Subordinate Voting Shares.

“After due inquiry, the Company identified the promotional materials as an article featuring the Company that was posted on February 25, 2019, on the website marijuanastox.com by Wining Media LLC. WM is an independent third-party investor relations and consulting firm. The Company engaged WM orally in January 2019 to provide public relations and communication services for the Company.”  MedMen said that the campaign was only intended to drive awareness of the company, its business and its securities. The story is now password protected https://marijuanastox.com/the-single-best-way-to-play-a-market-soaring-to-80-billion-per-year-retail/.

The stock price increased between February 26 and February 28th, but MedMen claims that the stock price could have increased because the company announced that it would be reporting earnings on February 27. They believe this is why the activity increased.

MedMen also claims that the article published by WM “was not approved according to the Company’s internal procedures.” However, the company also stated that its officers had editorial input into the creation of the article. In addition, MedMen provided WM with supporting documents including public filings,  prior press releases, and an investor relations presentation.

MedMen says that it “is committed to compliance with the OTC Markets Group Policy on Stock Promotion and the OTCQX Standards and Canadian securities laws. The Company does not condone the use of sensational language to describe the Company’s business prospects or the growth potential of the Company’s industry. The Company does not condone any statements made regarding urgency to invest in the Company’s stock or any other similar statements. Going forward, the Company will affirmatively prohibit all third-party service providers from including such statements in any investor relations or promotional materials respecting the Company.”

A variety of public relations firms have been hired by MedMen including Edelman (New York, NY); Azione (New York, NY); Stockhouse Publishing, Ltd (Vancouver, Canada); CFN Media Group (Whitefish, Montana); and Wining Media LLC. WM was asked to remove all promotional materials regarding MedMen from the public domain and to cease all promotional efforts on behalf of MedMen.

The OTC inquiry follows a lawsuit filed by the company’s former CFO James Parker in which he alleged securities violations, which the company also denies.


Debra BorchardtDebra BorchardtMarch 1, 2019

3min7080

MedMen Enterprises Inc.  (CSE: MMEN) (OTCQX: MMNFF) reported its second quarter of fiscal 2019 with revenue of $29.9 million. This represents a 39.1% quarter-over-quarter increase over the first quarter of fiscal 2019 ending September 30, 2018.

California is the main driver of sales. MedMen’s eight retail locations primarily in Southern California reported a combined $23.7 million in revenue. The company said that if the revenue included pending acquisitions it would have been $49.5 million for the quarter.

Unfortunately, the company is continuing to post losses. MedMen delivered a total net loss of $64.6 million compared to a net loss of $66.5 million for the first quarter. So, the losses have been trimmed somewhat. The net loss per share in the second quarter was $0.25 versus a net loss of $0.27 for the first quarter.

Gross profits before biological asset adjustment, were $13.3 million, as compared to $0.5 million in the second fiscal quarter of last year. The gross profit margin after biological asset adjustment was 53%, compared to 45% in the previous quarter.

“Our strong second quarter results support MedMen’s commitment to drive strong retail and sales performance, while efficiently scaling the Company and executing on our growth strategy,” said Adam Bierman, MedMen chief executive officer, and co-founder. “As we emphasized last quarter, we are in a new phase of growth, one focused on continuing to operationalize our industry-leading retail footprint and increasing our profitability. We are confident in the team we’ve built to drive our success.”

The company said that “In an effort to increase transparency, provide a better understanding of MedMen’s business, and ensure sales comparability between years, it is basing accounting on the 4-5-4 calendar structure. Additionally, the Company is now breaking out performance in the MD&A by retail, cultivation and manufacturing, corporate SG&A and pre-opening expenses.”

The company has been criticized for its high expenses. MedMen noted that “Of the total $40.9 million corporate SG&A expenses, $14.4 million was corporate payroll, which included the buildout of several teams within the company including finance and accounting, digital, business intelligence and marketing. SG&A expenses also included $8.6 million in marketing and branding as compared to $4.8 million in the first quarter of 2019.”

 



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