MedMen Reports Positive Financial Results

MedMen Reports Third Quarter Fiscal 2020 Financial Results – Designated News Release

Struggling cannabis retailer Medmen wants to fix things by keeping ...
  • Third quarter revenue of $45.9 million, up 41% year over year
  • Corporate SG&A decreased by 35% sequentially and 51% from the prior year period
  • Strengthened balance sheet through combination of equity, debt and sale of non-core assets
  • Achieved first month of positive after-tax cash flow across retail footprint
  • Appointed Tom Lynch as Interim Chief Executive Officer and Chief Restructuring Officer and Tim Bossidy as Interim Chief Operating Officer
  • Announced new board of director member, Niki Christoff, who currently serves as SVP of Strategy and Government Relations at Salesforce and held previous executive roles at Uber and Google

“We continued to make significant progress during the third quarter by delivering top-line growth, reducing our corporate overhead and attracting capital to support our strategic plan,” said MedMen Interim Chief Executive Officer Tom Lynch. “We are encouraged by the steps the business has taken to focus on disciplined growth and profitability amidst a challenging and unprecedented global environment. Through the strength of the MedMen brand and the capital partners that continue to support the Company, we are well-positioned to execute on our goal of being the leading cannabis retailer.”

Management Comment

Third Quarter Fiscal 2020 Review


  • Revenue: Systemwide revenue across MedMen’s operations in California, Nevada, New York, Illinois and Florida increased to $45.9 million for the quarter, up 41% year-over-year
  • Corporate SG&A: Corporate SG&A totaled $17.3 million, a 35% decrease from previous quarter, and 51% decrease from the prior year period. Subsequent to the quarter end, the Company further reduced corporate SG&A through an additional approximate 25% reduction in corporate headcount. In aggregate, the Company has reduced overall corporate SG&A by over $100 million on an annualized basis since the initial cost cutting efforts began in the fiscal second quarter of 2019.
  • Adjusted EBITDA: The Company reported an Adjusted EBITDA loss of $20.7 million for the quarter, an improvement over the Adjusted EBITDA loss of $35.1 million in the previous quarter. The Company’s cultivation and manufacturing facilities contributed to $12.9 million of the total Adjusted EBITDA loss.
  • Adjusted Retail EBITDA: Across its national retail footprint, the Company recorded a four-wall Adjusted EBITDA margin after local taxes and distribution expenses of 5%, compared to an 8% loss in the previous quarter, primarily driven by reduced payroll costs and local taxes.
  • Retail Cash Flow: For the month of March, the Company recorded positive after-tax cash flow (including estimated state, local and federal taxes) across its national retail footprint due to gross margin improvements, cost optimization initiatives and reduction in local taxes. The Company’s two highest-performing stores, Evanston, IL and West Hollywood, CA, combined for an after-tax cash flow margin of 17% during the month of March.
  • Balance Sheet: As of March 28, 2020, current assets totaled $123.9 million and included cash and cash equivalents of $31.8 million
  • Capital Markets: During the quarter, the Company raised $7.8 million in gross proceeds under the equity offering announced in December 2019, received $12.5 million in additional gross proceeds under its GGP senior secured convertible note facility and generated gross proceeds of $17.0 million through the sale of non-core assets

Retail Highlights:

  • California: California retail revenue totaled $29.6 million for the third quarter, representing a 19% increase from the same period last year. On a same-store basis, California retail stores are up 5% from the same period last year. The Beverly Hills, Santa Ana, LAX, Abbot Kinney and Downtown Los Angeles locations were up 13%, 28%, 27%, 13% and 14%, respectively, compared to the same period last year.
  • Illinois: The Company currently operates two stores in Illinois with locations in Oak Park and Evanston. Illinois became the Company’s second highest-grossing market during the quarter, with retail revenue totaling $6.7 million for the quarter, representing a 282% sequential increase over the second quarter, despite limited store hours due to product shortages across the state. Subsequent to the quarter end, the Company secured additional vendor support for increased product in anticipation of expanded store hours.
  • Nevada: Nevada retail revenue totaled $4.7 million for the third quarter, representing a 5% increase from same period last year. During the quarter, the Company temporarily shut down retail operations in its Downtown Las Vegas and Paradise locations due to COVID-19.
  • Florida: The Company operated eight retail locations in Florida during the third quarter. Due to improvements at its Eustis facility, the Company was able to enhance its inventory levels, leading to a 33% sequential revenue increase over the second quarter. Subsequent to the quarter end, the Company temporarily closed five of the eight locations to redirect limited product to higher traffic locations.
  • Massachusetts: The Company’s Fenway location is pending final regulatory approval and construction is anticipated to begin in calendar year 2020. In Newton, Massachusetts MedMen has signed a lease on a retail location and now is awaiting regulatory approvals.
  • New York: The Company operates four medical dispensaries in the state, with a flagship location on Fifth Avenue near Bryant Park.
  • Arizona: The Company is currently in the process of divesting its Arizona footprint, which includes three retail locations and various cultivation and manufacturing operations.
  • COVID-19: On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. While the ultimate severity of the outbreak and its impact on the economic environment is uncertain, the Company is monitoring the situation closely and is taking necessary steps to ensure the safety of its employees and customers. Despite being deemed as an essential retailer in its core markets, the Company has experienced a negative impact on sales in certain markets as a result of shelter-at-home orders, social distancing efforts, caps on maximum allowable people within a retail establishment, declining tourism and required modifications to store operations. Certain markets, such as California and Nevada, experienced a greater impact on sales due to reduced foot traffic in certain locations. Other markets, such as Illinois, Florida and New York have not been significantly impacted by COVID-19 and in some cases, stores in those markets have generated increased sales subsequent to the quarter end.

Capital Markets and Financing Activities:

  • Credit Facility: On March 30, 2020, the Company announced it closed on $12.5 million in additional gross proceeds under its $250.0 million senior secured convertible debt facility (the “Facility”) led by funds affiliated with Gotham Green Partners (collectively, “GGP”). Subsequent to the quarter end, GGP funded an additional $2.5 million under the Facility. In aggregate, GGP and co-investors have invested $150.0 million into the Company under the Facility to date.
  • Equity Investment: On January 14, 2020, the Company announced the closing of its $20.0 million offering of Class B Subordinate Voting Shares at a price per share of $0.43. Of the total offering, $7.8 million was received by the Company during the quarter.
  • Definitive Agreement on Sale of Non-Core Asset: On February 25, 2020 the Company entered into definitive agreements to assign its rights to acquire a licensed cultivation and manufacturing facility in Hillcrest, Illinois (“Hillcrest Facility”) for total gross proceeds of $17.0 million (“Hillcrest Transaction”). The Company previously received the right to acquire the Hillcrest Facility as part of its merger termination agreement with PharmaCann, LLC (“PharmaCann”).
  • Secured Term Loan Amendment: On January 14, 2020, the Company announced the execution and closing of definitive documentation for amendments to the terms and conditions of the $77.8 million senior secured term loan with funds managed by Stable Road and its affiliates.

Corporate Governance:

  • MedMen 2020 Annual General Meeting Results: The Annual General Meeting of MedMen shareholders was held on February 21, 2020 in Toronto, Canada under Executive Chairman, Ben Rose. Shareholders adopted all the resolutions submitted for approval. Shareholders re-elected Ben Rose, Adam Bierman and Jay Brown to the Board of Directors and added new members Mel Elias, Cameron Smith, and Chris Ganan. Jay Brown subsequently resigned from the Board of Directors on March 24, 2020. MNP LLP was re-appointed as the auditors of the Company.
  • Management Changes: Effective February 1, 2020, Adam Bierman, Co-Founder and Chief Executive Officer stepped down as Chief Executive Officer and the Board of Directors named the Company’s Chief Technology Officer, Ryan Lissack, as Interim Chief Executive Officer. On March 30, 2020, the Company appointed Tom Lynch as Interim Chief Executive Officer and Chief Restructuring Officer, succeeding Ryan Lissack. Tim Bossidy was appointed as Interim Chief Operating Officer.
  • Super Voting Shares: As part of his resignation, former Chief Executive Officer, Adam Bierman, agreed to surrender his Class A Super Voting shares. Following expiration of the limited proxy granted by Andrew Modlin to Ben Rose, MedMen will only have one class of outstanding shares, Class B subordinate voting shares, each of which entitle the holder to one vote.
  • Board Additions: During the quarter, the Company announced three additions to its Board of Directors
    • Mel Elias, former President and CEO of The Coffee Bean & Tea Leaf
    • Cameron Smith, a private angel investor and advisor focused on health food
    • Errol Schweizer, former Vice President of Grocery at Whole Foods Market

Subsequent Events:

  • Board of Directors: Effective May 26, 2020, the Company appointed Niki Christoff to its Board of Directors. Ms. Christoff currently serves as a Senior Vice President of Strategy and Government Relations at Salesforce, where she has held the role since 2017. Prior to joining Salesforce, Ms. Christoff served as Senior Director of Public Policy at Uber. Ms. Christoff also held a number of positions at Google over a span of eight years, including most recently, serving as Director of Global Communications and Public Affairs. In 2019, Ms. Christoff was named one of Fortune’s “25 Most Powerful Women in Politics.”

Transition to United States Generally Accepted Accounting Principles (“U.S. GAAP”):

The Company is required by the U.S. Securities and Exchange Commission (“SEC”) to test whether it continues to qualify as a foreign private issuer as of the last business day of every fiscal second quarter. As of December 28, 2019, the Company no longer met the qualification as a foreign private issuer as a result of more than 50% of the Company’s outstanding voting securities being held by residents of the United States. Effective June 27, 2020, MedMen will be considered a United States domestic issuer and non-accelerated filer under the rules of the SEC. Accordingly, the Company will prepare its audited consolidated financial statements for the 52 weeks ended June 27, 2020 in accordance with U.S. GAAP, with such change being applied retrospectively. The extent of the impact of this change in accounting framework has not yet been quantified by the Company.


MedMen is North America’s premium cannabis retailer with flagship locations in Los Angeles, Las Vegas, Chicago and New York. Through a robust selection of high-quality products, including MedMen-owned brands [statemade], LuxLyte and MedMen Red, and a team of cannabis-educated associates, MedMen has defined the next generation discovery platform for cannabis and all its benefits. MedMen’s industry-leading technology enables a fully compliant, owned-and-operated delivery service and MedMen Buds, a loyalty program. MedMen believes that a world where cannabis is legal and regulated is safer, healthier and happier. Learn more at


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