Can Struggling Behemoth MedMen Turn Itself Around?
With a new (permanent) CEO, there's a major restructuring happening with hopes it can.
Remember when MedMen looked like the future of cannabis, with its white-walled, Apple-like stores in trendy neighborhoods and quick expansion? Spike Jonze directed one if its ads. It was on a meteoric rise, which could only mean one thing: What goes up, must come down. And after lawsuits, a rotating door of leaders, and burned investors, MedMen has been on a fast track to crashing hard.
But it’s not over yet. Tom Lynch was made permanent chief executive in July after more than a year as interim CEO, according to the Los Angeles Business Journal. The executive, who helped right other troubled companies like Frederick’s of Hollywood and David’s Bridal, hopes to bring the Culver City-based cannabis company back into play — maybe even for a possible sale.
Reworking to stay afloat
In the beginning, MedMen seemingly had it all. The cannabis company had a lot of backing and grew rapidly — remember all the billboards everywhere? — but so did its debt. Lynch refinanced the company’s debt at lower interest rates, cut expenses, sold assets, and laid off a good chunk of its workforce. Still, as recently as March, management raised concerns that it might not have the cash to pay its bills.
“The previous management team was growth at all cost with very little adherence to the balance sheet or cash flow,” Paul Penney, chief investment officer with Boston-based KreditForce, a merchant bank that lends in emerging growth industries, told the LABJ. “They’ve curbed the losses and plugged the hole on losses going south. Now they are selling noncore assets and finding cheaper and more affordable debt. They are doing the rational things that they should have been doing for a long time.”
The ship sails on
Even scaling back, MedMen continues to expand its footprint in West Hollywood, Arizona, Illinois, and Florida, key markets for growth, and new outlets are set to open in Boston near Fenway Park and in San Francisco. But with more states going legal and an ever-growing market full of competitors, will it be enough?
“We have an incredible opportunity to capitalize on our recent successes, and continue on our path of rapid growth and profitability,” Lynch said in a statement. “It is our goal to solidify MedMen’s place as the premier cannabis retailer, and to continue the expansion of our retail footprint to ensure everyone has access to the highest quality and most effective cannabis products in the market today.”