Debra Borchardt
California-based MedMen Enterprises (MMNFF) has acquired Pharmacann in an all-stock transaction valued at $682 million. The deal expands MedMen’s footprint in the Midwest and the East Coast as the race to become the biggest multi-state player heats up.
With the merger, facilities in Illinois, New York, Pennsylvania, Maryland, Massachusetts, Ohio, Virginia, and Michigan will expand the MedMen portfolio. Pharmacann will own approximately 25% of the pro-forma company, on a fully-diluted basis, at closing.
“This is a transformative acquisition that will create the largest U.S. cannabis company in the world’s largest cannabis market,” said Adam Bierman, MedMen’s chief executive officer, and co-founder. “The transaction adds tremendous scale to our vertically integrated business model by expanding our U.S. retail footprint across important growth markets while strengthening our cultivation and production capabilities. With the revenue synergies that the deal is expected to produce, MedMen is well positioned to continue executing on our growth strategy. This would not have been possible even two years ago and is a testament to how far both the industry and these two companies have evolved.”
Pharmacann is a medical marijuana operator with 10 retail stores and three cultivation and production facilities across multiple states. According to the company, MedMen’s network nearly doubles through this absorption with a portfolio of cannabis licenses in 12 states that will permit the combined company to operate 79 cannabis facilities, making them the largest cannabis company with a brick-and-mortar footprint in America.
Expansion
The recent acquisition moves are a distinct departure from the company’s original plan to stick with just the high-density locations of Los Angeles, New York, and Las Vegas. Head of Communication Daniel Yi said, “We get asked that question a lot. Our plan was to establish ourselves and create a solid position in the three key areas. Now that we’ve accomplished that, it’s time to expand.” Yi said that the company believes that brick and mortar retail is where most cannabis consumers will gravitate and make their purchases and the company intends to capture that market.
This deal follows last week’s announcement in which MedMen signed an agreement to purchase Scottsdale-based cannabis company Monarch from WhiteStar Solutions. The company agreed to pay WhiteStar approximately 80% in stock and 20% in cash in an undisclosed amount. The stock consideration would be satisfied by way of issuance of shares of MedMen Enterprises, Inc.
MedMen also said last week that it was purchasing Chicago-based dispensary Seven Point for an undisclosed amount of cash at closing, deferred cash, and shares of MedMen Enterprises, Inc. Not done yet, MedMen closed a C$93,822,023 (US$73,275,000) senior secured term loan facility with funds managed by Hankey Capital and with an affiliate of Stable Road Capital as the largest loan participant.
Pharmacann
“PharmaCann has built highly-efficient cultivation centers and dispensaries to promote a better quality of life for medical marijuana patients,” said Teddy Scott, Ph. D., PharmaCann chief executive officer. “This acquisition validates the dedication and level of sophistication we have used to provide consistent patient outcomes. I am proudest of the top-notch team we have assembled here and their dedication to our mission of serving medical marijuana patients. Our organization is a natural fit for MedMen, and we are excited to join a leading enterprise with a best-in-class management team.”
Stock Performance
MedMen stock jumped almost 5% at the opening of trading on the news to lately trade at $4.40 on the OTC Market. The company is currently listed at roughly 70 million outstanding shares and with so many of these recent deals being done on the premise of issuing more shares, that number is expected to increase.
The company didn’t say at this time, what the amount of outstanding shares is expected to become, but company spokesman Daniel Yi said that issuing more shares to fund the company expansion was always part of the strategy.
