Dive Brief:

• Following plummeting stock, an exodus of top leadership and failing efforts to offload ballooning debt, cannabis company MedMen filed for bankruptcy in Canada, citing approximately $561 million CAD (about $411 million USD) in liabilities, according to company filings Friday.
• The Los Angeles, California-based company also placed its wholly-owned U.S. subsidiary, MM CAN USA, into receivership in a California court on April 23 for an orderly dissolution and liquidation of its assets based in that state, according to a Friday press release. MedMen also announced that its CFO, Amit Pandey, had resigned effective Feb. 13 and that each of its directors had resigned effective immediately prior to the commencement of its bankruptcy.
• The decision to shut down its operations “was made after careful consideration of the current financial condition of the Company and its subsidiaries, their inability to pay their liabilities as they become due and the anticipated enforcement actions of secured creditors,” the company said in its Friday release.

Dive Insight:

MedMen, once touted as the “Apple Store of weed,” appointed B. Riley Farber Inc. as its bankruptcy trustee as it goes through the process, per the press release.

The bankruptcy and receivership proceedings come after a sharp downward spiral by the once high-flying pot supplier, which has faced cash crunches and a revolving door for its executive leadership team in the midst of wider industry challenges. Pandey represented its seventh finance chief in a five-year period, taking on the role in July alongside new CEO Ellen Deutsch Harrison — its fifth top executive in three years, CFO Dive previously reported.

The revolving door of executives undertook multiple efforts to stabilize MedMen as it teetered on the edge of insolvency, struggling with high debt. Once a star player in the fast-expanding cannabis industry, MedMen made a name for itself as the first cannabis company to reach unicorn status by achieving a $1 billion valuation in 2018 that later rose as high as $3 billion, according to a report by Fortune.

However, the company soon ran into a string of challenges including questions over legal battles, executive compensation as well as mounting losses, according to a January report by MarketWatch. The wider cannabis industry also continued to struggle with both regulatory and banking challenges despite rapid growth in the space, with cannabis sales expected to increase to $148.9 billion worldwide by 2031, according to a report by Investopedia.

High taxes, a tricky regulatory environment and competition from illegal sellers have continued to impact the industry, with former unicorns like MedMen struggling to clamp down on rising costs.

In a February 2023 filing with the Securities and Exchange Commission, MedMen announced “substantial doubt” that it would be able to meet its obligations, reporting a working capital deficit of $137.4 million as of Dec. 24, 2022, with cash and cash equivalents of just $15.6 million at that period.

MedMen’s woes continued throughout last year despite its efforts to regain its financial footing with the appointments of Pandey and Harrison, both cannabis industry veterans. However, the company’s stock continued to plummet, with its stock falling to be valued at a fraction of a penny on Jan. 12, before hitting zero the following day, MarketWatch reported. On Jan. 5, the British Columbia Securities Commission and the Ontario Securities Commission issued a general “failure to file” cease-trade order on MedMen’s Canadian Securities Exchange listing due to a failure of financial filings, according to a SEC filing.

Also in that filing, MedMen announced Harrison had resigned as CEO effective Jan. 19, followed a few days later by the resignation of MedMen’s chairman of the board Michael Serruya.

Later that month, MedMen appointed Richard Ormond — founder and chairman of online arbitration platform Ejudicate Inc. and principal of turnaround service provider Stone Blossom Capital — as its chief restructuring officer. MedMen inked a consulting agreement with Stone Blossom Capital with an initial payment of $180,000 for the first four months of services and $45,000 per month afterwards, according to a company filing.

The company’s chief restructuring officer formally resigned as of April 23 and has now been appointed as receiver of its subsidiary of MM CAN US by the Los Angeles Superior Court, San Monica Division, the company said in its Friday press release.

MedMen did not immediately respond to requests for comment.