• MedMen and PharmaCann terminate enterprise mixture settlement
  • Along side the termination, MedMen will probably be compensated with retail and cultivation property in Illinois and Virginia
  • Termination opens up MedMen’s stability sheet to deepen presence in core retail markets of California, Illinois, Nevada, Florida, New York and Massachusetts and make investments additional in its omni-channel platform
  • Appoints Zeeshan Hyder as Chief Monetary Officer, efficient instantly

 

October 08, 2019 06:00 AM Japanese Daylight Time

LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen” or the “Firm”), a number one cannabis retailer with operations throughout the U.S., in the present day introduced the mutual settlement to terminate the Enterprise Mixture Settlement dated December 23, 2018, pursuant to which MedMen was to accumulate PharmaCann, LLC (“PharmaCann”) in an all-stock transaction (“Transaction”). In gentle of market developments over the previous 12 months and the continued evolution of its enterprise technique, MedMen and its Board have decided that specializing in leveraging the Firm’s retail model, its management place in California, and its digital platform to develop the enterprise will create better shareholder worth than the completion of the Transaction. In reference to the termination, PharmaCann has agreed to switch sure cannabis licenses and associated property in Illinois and Virginia to MedMen for no extra consideration from MedMen, apart from the forgiveness of sure debt, as additional described under.

“Wanting on the PharmaCann portfolio in the present day, Illinois has emerged as probably the most engaging alternative for our longer-term, strategic development plan. The addition of these property, with out dilution, is a win for MedMen and our shareholders.”

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“The cannabis sector has advanced tremendously since we first introduced the PharmaCann transaction and primarily based on the present macro-environment and future alternatives that exist for our enterprise, we imagine it’s now in the perfect curiosity of our shareholders to deepen, somewhat than widen, our Firm’s attain,” mentioned Adam Bierman, MedMen co-founder and chief govt officer. “Wanting on the PharmaCann portfolio in the present day, Illinois has emerged as probably the most engaging alternative for our longer-term, strategic development plan. The addition of these property, with out dilution, is a win for MedMen and our shareholders.”

On December 24, 2018, MedMen introduced that it had entered into the definitive settlement to accumulate PharmaCann, through which PharmaCann unitholders had been anticipated to obtain roughly 168.four million shares within the mixed firm, primarily based on MedMen’s absolutely diluted shares excellent as of June 29, 2019. Because the announcement, a number of {industry} developments have considerably impacted the accretive nature of the Transaction, together with the next:

  • The capital markets, each for the U.S. and Canadian cannabis industries, have shifted since March 2019, with the HMMJ index down 47%1 throughout that point interval. The underperformance has made it more and more extra essential to allocate capital effectively given the present {industry} headwinds. Whereas PharmaCann holds a number of licenses throughout the U.S., a big portion of its property, notably associated to cultivation and manufacturing in medical markets, require vital capital expenditures.
  • Over the previous six months, MedMen has determined to more and more give attention to California, the place there stays vital upside for cannabis operators. Roughly 76%2 of California cities proceed to ban leisure cannabis. A number of jurisdictions inside the state just lately introduced the graduation of leisure gross sales, and the Firm has been actively making use of for, buying and constructing out retail places throughout the state, the place it’s licensed for 17 shops. MedMen plans to have 30 shops within the state by the tip of calendar 12 months 2020. Given the worth MedMen has created in California, the Firm doesn’t imagine entry into non-core markets is definitely worth the diploma of shareholder dilution required by the Transaction.
  • The closing timeline for the Transaction was considerably impacted given regulatory hurdles on the federal and state degree, which delayed the mixing and realization of synergies that had been initially factored into the worth of the Transaction to the Firm.
  • Along with increasing its retail footprint, MedMen believes allocating capital and assets in direction of enhancing its omni-channel providing in its core markets, by its supply and loyalty platforms, will create extra long-term shareholder worth than getting into new medical markets, equivalent to Pennsylvania, Ohio and Maryland, the place the Firm doesn’t at the moment have working leverage.

As a part of the settlement to terminate, PharmaCann has agreed to pay a termination charge to MedMen by a switch of the membership pursuits (“Switch of Pursuits”) in three entities holding the next 4 property:

  • Operational cultivation and manufacturing facility in Hillcrest, Illinois
  • Retail location in Evanston, Illinois
  • Retail license for Larger Chicago, Illinois
  • License for vertically built-in facility in Virginia

On a professional forma foundation, MedMen can have licenses for 4 retail places in Larger Chicago, together with its present location in Oak Park, Illinois. The Firm may also maintain considered one of solely 213 cultivation and manufacturing licenses within the state, which is able to permit MedMen to vertically combine and have full management of its provide chain as soon as leisure gross sales begin in January 2020. As a part of the settlement to terminate and contingent on the profitable Switch of Pursuits, MedMen will forgive all quantities excellent below its present line of credit score to PharmaCann (the “Line of Credit score”), which totaled roughly US$21 million, together with accrued curiosity, as of September 30, 2019. Within the occasion any Switch of Curiosity is unable to happen resulting from a closing adjudication or denial by the relevant regulatory physique governing such license (a “Rejected Switch”), PharmaCann pays MedMen an quantity equal to (i) one-third (1/3) of the mixture principal quantity and any corresponding accrued curiosity thereon owed below the Line of Credit score (such curiosity to be calculated as if no mortgage forgiveness of any portion of the Line of Credit score occurred), and (ii) US$10 million (such quantities are collectively known as the “Rejected Switch Charge”) for every denial. Any such Rejected Switch Charge shall be paid inside 5 days of the associated Rejected Switch, or, PharmaCann might elect to finance the Rejected Switch Charge, supplied that the financed Rejected Switch Charge shall accrue curiosity at a price of seven and one-half p.c (7.5%) every year and be due and payable on the primary anniversary of the date of the Rejected Switch.

Moreover, efficient in the present day, Zeeshan Hyder has been appointed Chief Monetary Officer at MedMen. Mr. Hyder, at the moment MedMen’s Chief Company Growth Officer, has been an integral a part of the management group at MedMen since 2017, overseeing company improvement, investor relations and different monetary development initiatives. His understanding of the corporate’s strategic plan and deep information of the cannabis {industry} present a wonderful basis for continued fiscal success. So far, Mr. Hyder has led over $300M in M&A offers executed, partnered with the CEO to take the corporate public and raised $500M in capital for direct funding into the enterprise.

Mr. Hyder, alongside MedMen’s CEO and Board, has seen the enterprise by an vital chapter and will probably be instrumental in spearheading the corporate’s path in direction of profitability. MedMen is focusing on break even EBITDA by the tip of calendar 2020 and can present additional particulars on the October 28th earnings name.

Hyder succeeds Michael Kramer, whose employment has been terminated as of October 7, 2019. Mr. Kramer will give attention to a seamless transition and as such has signed a consulting settlement for the rest of the calendar 12 months.

1 Supply: Bloomberg; represents time interval between March 19, 2019 and September 30, 2019
2 Supply: https://www.latimes.com/california/story/2019-08-14/californias-biggest-legal-marijuana-market
3 Supply: https://www2.illinois.gov/websites/agr/Crops/MCPP/Pages/default.aspx

About MedMen:

Based in 2010, MedMen is North America’s premium cannabis retailer. Founders Adam Bierman and Andrew Modlin have outlined the subsequent era discovery platform for cannabis and all its advantages. A strong number of high-quality merchandise, together with MedMen-owned manufacturers [statemade], LuxLyte and MedMen Purple, coupled with a group of cannabis-educated associates cement the Firm’s dedication to offering an unparalleled expertise. MedMen’s industry-leading expertise allows a completely compliant, owned-and-operated supply service and MedMen Buds, a nationwide loyalty program.

MedMen believes {that a} world the place cannabis is authorized and controlled is safer, more healthy and happier. Be taught extra at www.MedMen.com.

SOURCE: MedMen Enterprises

Cautionary Be aware Relating to Ahead-Wanting Info and Statements:

This press launch comprises sure “forward-looking data” inside the which means of relevant Canadian securities laws and might also include statements that will represent “forward-looking statements” inside the which means of the protected harbor provisions of america Personal Securities Litigation Reform Act of 1995, 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996). Such forward-looking data and forward-looking statements are usually not consultant of historic details or data or present situation, however as an alternative signify solely MedMen’s beliefs relating to future occasions, plans or aims, lots of which, by their nature, are inherently unsure and outdoors of MedMen’s management. Usually, such forward-looking data or forward-looking statements may be recognized by way of forward-looking terminology equivalent to “plans”, “expects” or “doesn’t anticipate”, “is anticipated”, “price range”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “doesn’t anticipate”, or “believes”, or variations of such phrases and phrases or might include statements that sure actions, occasions or outcomes “might”, “may”, “would”, “would possibly” or “will probably be taken”, “will proceed”, “will happen” or “will probably be achieved”. The forward-looking data and forward-looking statements contained herein might embody, however are usually not restricted to, the anticipated advantages from terminating the Transaction, expectations relating to the Switch of Pursuits, together with the power to finish such asset transfers, expectations relating to the receipt from PharmaCann of Rejected Switch Charges within the occasion of any Rejected Switch, expectations relating to the variety of places to be working in California by the tip of calendar 12 months 2020, and expectations for different financial, enterprise, and/or aggressive elements.

By figuring out such data and statements on this method, MedMen is alerting the reader that such data and statements are topic to recognized and unknown dangers, uncertainties and different elements that will trigger the precise outcomes, degree of exercise, efficiency or achievements of MedMen to be materially totally different from these expressed or implied by such data and statements. As well as, in reference to the forward-looking data and forward-looking statements contained on this press launch, MedMen has made sure assumptions. Among the many key elements that would trigger precise outcomes to vary materially from these projected within the forward-looking data and statements are the next: lack of ability to obtain the requisite regulatory approvals for the Switch of Pursuits, lack of ability of PharmaCann to pay any Rejected Switch Charges that will come up because of a number of Rejected Transfers, adjustments basically financial, enterprise and political circumstances, together with adjustments within the monetary markets; adjustments in relevant legal guidelines and compliance with in depth authorities regulation. Ought to a number of of those dangers, uncertainties or different elements materialize, or ought to assumptions underlying the forward-looking data or statements show incorrect, precise outcomes might differ materially from these described herein as meant, deliberate, anticipated, believed, estimated or anticipated.

Though MedMen believes that the assumptions and elements utilized in making ready, and the expectations contained in, the forward-looking data and statements are affordable, undue reliance shouldn’t be positioned on such data and statements, and no assurance or assure may be on condition that such forward-looking data and statements will show to be correct, as precise outcomes and future occasions may differ materially from these anticipated in such data and statements. The forward-looking data and forward-looking statements contained on this press launch are made as of the date of this press launch, and MedMen doesn’t undertake to replace any forward-looking data and/or forward-looking statements which might be contained or referenced herein, besides in accordance with relevant securities legal guidelines. All subsequent written and oral forward-looking data and statements attributable to MedMen or individuals performing on its behalf is expressly certified in its entirety by this discover.

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