MedMen Enterprises’ national cannabis retail strategy is going up in smoke. And to trim costs, it’s selling its interest in Treehouse Real Estate Investment Trust.
The Culver City-based MedMen was instrumental in forming Treehouse alongside Venice-based investment firm Stable Road Capital earlier this year. Treehouse had planned to make leaseback deals with MedMen for all classes of properties, including retail stores, and cultivation and production facilities.
But that’s over now.
As part of a larger restructuring plan announced Friday, MedMen said it partially sold its stake in the REIT manager for total net proceeds of $14 million.
MedMen chief executive Adam Beirman did not return phone calls Friday afternoon.
It’s been far from smooth sailing ever since the nearly 10-year-old MedMen became the first U.S.-based cannabis company to go public on the Canadian Securities Exchange in 2018 (it’s also traded in the U.S.). The retailer had roughly $105.6 million in debt at the end of March, according to a company document.
In an attempt to slow the cash-burn, MedMen also announced plans to lay off 190 employees, cut its corporate spending from $154 million on an annualized run-rate basis to $85 million by the end of its fiscal third quarter in 2020. Layoffs have happened sporadically all year long as it attempted to regain its financial footing, according to company documents.
Last month, MedMen scrapped its all-stock, $682 million acquisition of Chicago-based PharmaCann, a deal that would have greatly expanded MedMen’s footprint to several states in the mid-Atlantic coast.
In a statement on Friday, MedMen said it would prioritize high-growth retail markets such as Los Angeles, Las Vegas, New York City, Miami and Chicago, and limit exposure in what it called non-core markets.
The company currently operates in nine states with 33 licensed retail stores in California, Florida, Illinois, Nevada and New York – with a handful of others scheduled to open in coming months in Arizona, Massachusetts, Michigan and Virginia. Overall, MedMen has 70 licenses to sell cannabis nationwide.
The company also said that it would limit new store openings in 2020 to stores with revenue potential that the company believes is greater than $10 million within the first year of becoming operational. Plans for medical marijuana expansions in Arizona and New York are on hold.
MedMen, which also will consolidate its corporate offices to reduce rent costs, has seen a revolving door of senior level executives, as well as top executives give up salaries as they fight for financial survival.
MedMen has also hired Canaccord Genuity Corp. to explore strategic alternatives for certain operations and licenses in states that are currently deemed not critical to the company’s retail footprint.