To survive, MedMen Enterprises (MMNFF) plans to simplify.
The popular, yet troubled, cannabis dispensary chain wants to get out of the business of growing and producing cannabis so it can focus on its retail stores.
“While vertical integration has been a big focus for the industry, our growing belief is that cannabis is evolving like every other consumer vertical: with a fragmented value chain and specialists at each layer,” Ryan Lissack, MedMen’s newly appointed interim CEO said during the company’s second-quarter earnings call on Wednesday.
The company reported quarterly revenue (excluding recently sold Arizona stores) of $44.1 million up 50% from a year earlier. Its net loss widened to $40.6 million from $18.7 million.
In addition to outsourcing cultivation and production operations, MedMen plans to put each existing store under a microscope to ensure they will generate cash. If that’s not the case, then stores might be temporarily or permanently shut down.
“We cannot continue to invest in assets that are not producing near-term cash returns,” said Zeeshan Hyder, MedMen’s chief financial officer.
The retail-first focus is one part of an effort from a new management team — and new board leadership — to salvage a cannabis company that is running low on cash and is deeply in debt after a lengthy bout of growing too big, too fast.
“The board is acutely aware of the importance of raising additional capital,” Executive Chairman Ben Rose said during the call.
Rose indicated MedMen officials are in advanced discussions with partners for long-term funding.