MedMen (MMNFF) is a major US cannabis retailer. The company’s main objective is to expand its brand by increasing its number of flagship retail stores in the country. It strives to offer a wide range of high-quality cannabis products to provide a unique experience to customers.
Adam Bierman and Andrew Modlin founded MedMen in 2010. The company’s headquarters are in Culver City, California. Its vision is to build a world where cannabis is legal and regulated. Its founders believe that cannabis will make the world safer, healthier, and happier.
The company’s current top management consists of CEO and founder Bierman, President and founder Modlin, and CFO Zeeshan Hyder. The company went public in May 2018 through a reverse takeover. It’s listed on the Canadian Securities Exchange under the ticker MMEN.
Products and brands
MedMen has an expanded product portfolio of over 400 products. It offers its products in a wide range of categories, including edibles, vaporizers, flowers, concentrates, pre-rolls, beverages, topicals, pet products, accessories, and apparel. Its products are further classified by user experience, different strains, product effects, and potency. MedMen has three core brands:
- Statemade: This brand provides an extensive portfolio of cannabis products in the forms of vape pens, flowers, pre-rolls, and drops. Statemade products are sourced from the same state in which they’re sold. The brand has products in seven concentrations, including Max for activity, Joy for happiness, Zen for enlightenment, Ebb for fluidity, ZZZ for rest, One for balance, and CBD for wellness.
- LuxLyte: This brand provides five precise CBD-to-THC concentrations as health solutions extracted from high-quality cannabis. These CBD-to-THC concentrations are 1:0 for relaxation, 1:1 for balanced well-being, 1:20 for an uplifting effect, 1:50 for a sense of calm, and 1:100 for nighttime use.
- MedMen Red: This brand provides custom-formulated solutions in easy-to-use forms. The brand has a broad spectrum of products to help users find one suitable for them. These products are available in disposable pens and cartridges.
In addition to these core brands, the company’s brands include 710 Labs extracts, A Golden State, AbsoluteXtracts, AlienLabs, Apothecanna, Atlas, Bad Apple, Beboe, and Bic.
MedMen has strategic partnerships with some leading companies for the improvement of its product portfolio. It entered into a partnership with Aurora Cannabis in 2015. MedReleaf CEO Neil Closner also joined its board of directors. This partnership is focused on product expansion and market penetration. MedMen also entered into a cross-border partnership with Cronos Group in 2018. The companies formed a new joint venture, MedMen Canada, with equal stake between them.
In addition to this, MedMen initiated the acquisition of PharmaCann for $682 million. This acquisition’s value marked the highest buyout among US-based cannabis companies. The deal was initially delayed due to regulatory barriers. It later fell apart, with MedMen acquiring only part of PharmaCann’s Illinois operations. MedMen will get one of PharmaCann’s two cultivation facilities and a license for setting up a facility in Virginia. The company will also get one retail store in Illinois and a license to open one more.
Right now, MedMen has a 45,000-square-foot production facility in Nevada and a 45,000-square-foot cannabis factory in California. Both facilities are expected to operate at full capacity by the first half of 2020. In addition to this, MedMen will acquire a facility from PharmaCann in Illinois. MedMen currently has 33 retail stores across nine states and has licenses for up to 70 retail operations.
- California: California has 13 MedMen retail stores in operation. The company also has licenses to open four more stores in the state.
- Nevada: Nevada has three operational MedMen retail stores. Its Las Vegas (Paradise) location is its second-best revenue-generating store in the US.
- Florida: Florida has licenses to open up to 35 retail stores. At present, the state has eight MedMen retail operations. Of these, three retail stores have opened in the last three months.
- Arizona: Right now, Arizona features three of the company’s retail operations.
- Illinois: MedMen currently has only one retail store in Illinois, and it’s located in Oak Park. It will soon add one more retail location from PharmaCann.
- New York: The state currently has four dispensaries, including its flagship store.
- Massachusetts: The company is currently awaiting regulatory approval to start construction at its Fenway Boston location in 2020.
- Michigan: The state currently has one retail operation.
- Virginia: One retail store will be coming to Virginia soon.
- MedMen Buds: The company launched a loyalty program in September 2019. Via this program, members earn points for their purchases, which they can redeem on future purchases. This program also gives discounts to its members. As of November 26, the loyalty program had 170,000 members.
- MedMen Delivery: MedMen launched a delivery service in California in September 2019. This service provides customers with same-day delivery using its omni-channel expertise. The platform is expected to generate $6 million in revenue in one year.
MedMen’s recent financial highlights
According to MedMen’s fiscal 2020 first-quarter earnings statement, its net revenue stood at $44 million in the first quarter. This amount implied a 5% increase sequentially and a 105% increase year-over-year. Of the rise, 30% originated from its California retail stores. The company reported a gross margin of 52% for the quarter. Further, it recorded $22.2 million in adjusted EBITDA losses in the quarter.
After the release of MedMen’s first-quarter earnings results, management hatched a plan to achieve its target of positive EBITDA by next year. Management believes it can execute the plan and expand its retail presence at the same time. The plan consists of five parts.
Firstly, management plans to concentrate on core markets to increase revenue while disposing of noncore assets. Secondly, it plans to reduce corporate SG&A (selling, general, and administrative) expenses. Corporate SG&A expenses in the first quarter totaled $30.6 million. Thirdly, the company plans to increase its asset-level EBITDA. Fourthly, it’s working on reducing its cash flows for the next year. Finally, management plans to improve its workplace culture to improve efficiency in the workforce.
In line with this plan, the company has laid off 190 employees, including 80 employees working at the corporate level. In addition to the layoffs, the company has delayed the expansion of its noncore retail presence indefinitely, resulting in $55.0 million worth of capex being put on hold.