By Alicia Wallace
Cannabis dispensary operator MedMen Enterprises had aspirations to be the biggest, most premium player in the emerging industry. It opened locations in Beverly Hills and on Manhattan’s Fifth Avenue and grew its name to the extent that it was even parodied on “South Park.”
But MedMen has fallen on hard times, fallen behind on payments to vendors and is working with a business advisory firm to settle its debts — including offering stock as payment.
The company’s troubles are a symptom of the broader industry’s issues. Many different companies and investors have been jockeying to take control of the nascent industry, or at least to grab a significant portion of the billions that could be at stake if and when cannabis is legalized nationally. But even some of the biggest operators have found themselves retrenching recently; those that moved most aggressively to expand, like MedMen, have been hit particularly hard.
MedMen, which is in the throes of a restructuring amid a rocky financial spell, has engaged FTI Consulting to manage its outstanding balances to vendors and partners, MedMen CEO Adam Bierman told CNN Business during an interview last week.
“We absolutely paused on making [accounts payable] payments as we went through the restructuring so that, with FTI’s help, we could organize the manner in which we were going to pay off our … balances as is common in any restructuring,” Bierman said.
MedMen’s aggressive efforts to rein in costs and attempt to get the business on solid footing have included cutting hundreds of jobs, selling off stores, reworking financing arrangements, and negotiating payment terms with the companies whose products line the shelves of MedMen stores in states such as California, Nevada and New York.
MedMen, which is based in Culver City, California, has been spending cash as quickly as it’s making it. The company spent $44 million in cash on operating activities in its quarter ending in September of last year, according to financial filings made with Canadian Securities Administrators. Its revenue over the same period? $44 million.
About 10 days ago, cannabis stock bloggers and investors started publishing anonymous emails from purported MedMen suppliers and contractors who claimed they had received letters from MedMen seeking payment extensions and renegotiations or containing offers to pay in stock in place of some of the cash owed.
“As part of the restructuring, the company has been actively working with its vendor partners on modifying payment terms, which in some cases include stock consideration,” MedMen Chief Financial Officer Zeeshan Hyder, said in an emailed statement to CNN Business. “Like other retailers, the company is in constant communication with its vendors and is working towards solutions that are in the best interest of both parties.”