LOS ANGELES–(Company WIRE)–MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen” or the “Business”), a top cannabis retailer with operations across the U.S., right now announced the mutual agreement to terminate the Company Mixture Agreement dated December 23, 2018, pursuant to which MedMen was to obtain PharmaCann, LLC (“PharmaCann”) in an all-stock transaction (“Transaction”). In light of market place developments more than the previous 12 months and the continued evolution of its organization approach, MedMen and its Board have determined that focusing on leveraging the Company’s retail brand, its leadership position in California, and its digital platform to develop the organization will build higher shareholder worth than the completion of the Transaction. In connection with the termination, PharmaCann has agreed to transfer specific cannabis licenses and associated assets in Illinois and Virginia to MedMen for no more consideration from MedMen, other than the forgiveness of specific debt, as additional described under.
“Looking at the PharmaCann portfolio right now, Illinois has emerged as the most appealing chance for our longer-term, strategic development strategy. The addition of these assets, devoid of dilution, is a win for MedMen and our shareholders.”
“The cannabis sector has evolved tremendously considering that we very first announced the PharmaCann transaction and primarily based on the present macro-atmosphere and future possibilities that exist for our organization, we think it is now in the finest interest of our shareholders to deepen, rather than widen, our Company’s attain,” stated Adam Bierman, MedMen co-founder and chief executive officer. “Looking at the PharmaCann portfolio right now, Illinois has emerged as the most appealing chance for our longer-term, strategic development strategy. The addition of these assets, devoid of dilution, is a win for MedMen and our shareholders.”
On December 24, 2018, MedMen announced that it had entered into the definitive agreement to obtain PharmaCann, in which PharmaCann unitholders have been anticipated to acquire roughly 168.four million shares in the combined enterprise, primarily based on MedMen’s completely diluted shares outstanding as of June 29, 2019. Given that the announcement, numerous market developments have substantially impacted the accretive nature of the Transaction, such as the following:
- The capital markets, each for the U.S. and Canadian cannabis industries, have shifted considering that March 2019, with the HMMJ index down 47%1 during that time period. The underperformance has created it increasingly a lot more essential to allocate capital effectively provided the present market headwinds. When PharmaCann holds numerous licenses across the U.S., a huge portion of its assets, especially associated to cultivation and manufacturing in healthcare markets, need considerable capital expenditures.
- More than the previous six months, MedMen has decided to increasingly concentrate on California, exactly where there remains considerable upside for cannabis operators. Around 76%two of California cities continue to ban recreational cannabis. Numerous jurisdictions inside the state lately announced the commencement of recreational sales, and the Business has been actively applying for, acquiring and creating out retail areas across the state, exactly where it is licensed for 17 retailers. MedMen plans to have 30 retailers in the state by the finish of calendar year 2020. Provided the worth MedMen has developed in California, the Business does not think entry into non-core markets is worth the degree of shareholder dilution needed by the Transaction.
- The closing timeline for the Transaction was substantially impacted provided regulatory hurdles at the federal and state level, which delayed the integration and realization of synergies that have been initially factored into the worth of the Transaction to the Business.
- In addition to expanding its retail footprint, MedMen believes allocating capital and sources towards enhancing its omni-channel supplying in its core markets, by means of its delivery and loyalty platforms, will build a lot more lengthy-term shareholder worth than getting into new healthcare markets, such as Pennsylvania, Ohio and Maryland, exactly where the Business does not presently have operating leverage.
As portion of the agreement to terminate, PharmaCann has agreed to spend a termination charge to MedMen by means of a transfer of the membership interests (“Transfer of Interests”) in 3 entities holding the following 4 assets:
- Operational cultivation and production facility in Hillcrest, Illinois
- Retail place in Evanston, Illinois
- Retail license for Higher Chicago, Illinois
- License for vertically integrated facility in Virginia
On a pro forma basis, MedMen will have licenses for 4 retail areas in Higher Chicago, such as its current place in Oak Park, Illinois. The Business will also hold one particular of only 21three cultivation and production licenses in the state, which will enable MedMen to vertically integrate and have complete handle of its provide chain as soon as recreational sales commence in January 2020. As portion of the agreement to terminate and contingent on the productive Transfer of Interests, MedMen will forgive all amounts outstanding beneath its current line of credit to PharmaCann (the “Line of Credit”), which totaled roughly US$21 million, such as accrued interest, as of September 30, 2019. In the occasion any Transfer of Interest is unable to happen due to a final adjudication or denial by the applicable regulatory physique governing such license (a “Rejected Transfer”), PharmaCann will spend MedMen an quantity equal to (i) one particular-third (1/three) of the aggregate principal quantity and any corresponding accrued interest thereon owed beneath the Line of Credit (such interest to be calculated as if no loan forgiveness of any portion of the Line of Credit occurred), and (ii) US$10 million (such amounts are collectively referred to as the “Rejected Transfer Fee”) for each and every denial. Any such Rejected Transfer Charge shall be paid inside 5 days of the associated Rejected Transfer, or, PharmaCann could elect to finance the Rejected Transfer Charge, supplied that the financed Rejected Transfer Charge shall accrue interest at a price of seven and one particular-half % (7.five%) per annum and be due and payable on the very first anniversary of the date of the Rejected Transfer.
Furthermore, successful right now, Zeeshan Hyder has been appointed Chief Monetary Officer at MedMen. Mr. Hyder, presently MedMen’s Chief Corporate Improvement Officer, has been an integral portion of the leadership group at MedMen considering that 2017, overseeing corporate improvement, investor relations and other economic development initiatives. His understanding of the company’s strategic strategy and deep know-how of the cannabis market offer an exceptional foundation for continued fiscal achievement. To date, Mr. Hyder has led more than $300M in M&A offers executed, partnered with the CEO to take the enterprise public and raised $500M in capital for direct investment into the organization.
Mr. Hyder, alongside MedMen’s CEO and Board, has observed the organization by means of an essential chapter and will be instrumental in spearheading the enterprise’s path towards profitability. MedMen is targeting break even EBITDA by the finish of calendar 2020 and will offer additional specifics on the October 28th earnings contact.
Hyder succeeds Michael Kramer, whose employment has been terminated as of October 7, 2019. Mr. Kramer will concentrate on a seamless transition and as such has signed a consulting agreement for the remainder of the calendar year.
1 Source: Bloomberg represents time period involving March 19, 2019 and September 30, 2019
two Source: https://www.latimes.com/california/story/2019-08-14/californias-largest-legal-marijuana-market place
three Source: https://www2.illinois.gov/internet sites/agr/Plants/MCPP/Pages/default.aspx
Founded in 2010, MedMen is North America’s premium cannabis retailer. Founders Adam Bierman and Andrew Modlin have defined the subsequent generation discovery platform for cannabis and all its advantages. A robust choice of higher-high quality goods, such as MedMen-owned brands [statemade], LuxLyte and MedMen Red, coupled with a group of cannabis-educated associates cement the Company’s commitment to delivering an unparalleled knowledge. MedMen’s market-top technologies enables a completely compliant, owned-and-operated delivery service and MedMen Buds, a nationwide loyalty system.
MedMen believes that a globe exactly where cannabis is legal and regulated is safer, healthier and happier. Study a lot more at www.MedMen.com.
Supply: MedMen Enterprises
Cautionary Note Relating to Forward-Hunting Facts and Statements:
This press release consists of specific “forward-seeking information” inside the which means of applicable Canadian securities legislation and could also include statements that could constitute “forward-seeking statements” inside the which means of the protected harbor provisions of the United States Private Securities Litigation Reform Act of 1995, 15 U.S.C.A. Sections 77z-two and 78u-five (Supp. 1996). Such forward-seeking info and forward-seeking statements are not representative of historical information or info or present situation, but as an alternative represent only MedMen’s beliefs concerning future events, plans or objectives, a lot of of which, by their nature, are inherently uncertain and outdoors of MedMen’s handle. Normally, such forward-seeking info or forward-seeking statements can be identified by the use of forward-seeking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or could include statements that specific actions, events or final results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-seeking info and forward-seeking statements contained herein could include things like, but are not restricted to, the anticipated advantages from terminating the Transaction, expectations concerning the Transfer of Interests, such as the capacity to total such asset transfers, expectations concerning the receipt from PharmaCann of Rejected Transfer Costs in the occasion of any Rejected Transfer, expectations concerning the quantity of areas to be operating in California by the finish of calendar year 2020, and expectations for other financial, organization, and/or competitive components.
By identifying such info and statements in this manner, MedMen is alerting the reader that such info and statements are topic to identified and unknown dangers, uncertainties and other components that could bring about the actual final results, level of activity, efficiency or achievements of MedMen to be materially various from these expressed or implied by such info and statements. In addition, in connection with the forward-seeking info and forward-seeking statements contained in this press release, MedMen has created specific assumptions. Amongst the important components that could bring about actual final results to differ materially from these projected in the forward-seeking info and statements are the following: inability to acquire the requisite regulatory approvals for the Transfer of Interests, inability of PharmaCann to spend any Rejected Transfer Costs that could arise as a outcome of one particular or a lot more Rejected Transfers, alterations in basic financial, organization and political situations, such as alterations in the economic markets alterations in applicable laws and compliance with in depth government regulation. Ought to one particular or a lot more of these dangers, uncertainties or other components materialize, or ought to assumptions underlying the forward-seeking info or statements prove incorrect, actual final results could differ materially from these described herein as intended, planned, anticipated, believed, estimated or anticipated.
While MedMen believes that the assumptions and components made use of in preparing, and the expectations contained in, the forward-seeking info and statements are affordable, undue reliance ought to not be placed on such info and statements, and no assurance or assure can be provided that such forward-seeking info and statements will prove to be precise, as actual final results and future events could differ materially from these anticipated in such info and statements. The forward-seeking info and forward-seeking statements contained in this press release are created as of the date of this press release, and MedMen does not undertake to update any forward-seeking info and/or forward-seeking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-seeking info and statements attributable to MedMen or persons acting on its behalf is expressly certified in its entirety by this notice.
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