MedMen Reports Second Quarter Fiscal Year 2019 Financial Results

  • Increased revenue sequentially by 39% to $29.9 million.
  • Continued to perform favorably in California with eight retail
    locations reporting a combined $23.7 million in revenue, representing
    a 28% quarter-over-quarter increase.
  • Increased overall gross profit margin to 53%, compared to 45% in
    the previous quarter.
  • Appointed key personnel to the management team, including Michael
    Kramer as CFO.
  • During the quarter, closed on acquisition of vertically-integrated
    license in Scottsdale, Arizona and dispensary license in Emeryville,

LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (“MedMen” or the “Company”) (CSE: MMEN) (OTCQX:
MMNFF) (FSE: A2JM6N) today released its consolidated financial results
for the second quarter of fiscal 2019. All financial information for the
13-week period ended December 29, 2018 is reported in U.S. dollars,
unless otherwise indicated.

Management Commentary

“Our strong second quarter results support MedMen’s commitment to drive
strong retail and sales performance, while efficiently scaling the
Company and executing on our growth strategy,” said Adam Bierman, MedMen
chief executive officer and co-founder. “As we emphasized last quarter,
we are in a new phase of growth, one focused on continuing to
operationalize our industry-leading retail footprint and increasing our
profitability. We are confident in the team we’ve built to drive our

After going public almost one year ago, MedMen has established a track
record of growth and success. With approximately 7% market share in
California, the largest cannabis market in the U.S., the Company is
planning to open 16 new locations across the U.S. in calendar 2019. Of
the 16 new locations, 12 will be based in Florida, where MedMen is
licensed for up to 30 locations. Additionally, four retail sites in
Florida are expected to open in the next 90 days in the following
locations: Key West, Orlando, West Palm Beach, and St. Petersburg.

Second Quarter 2019 Overview

Financial Results:

  • Systemwide sales revenue of $29.9 million, which represents at 39.1%
    quarter-over-quarter increase over fiscal 2019 first quarter ended
    September 30, 2018.
  • Gross profit margin improved to 53% from 45% in the prior quarter due
    to unrealized gain on changes in fair value of biological assets.
  • Company’s eight retail locations in California reported a combined
    $23.7 million in revenue, a 28% quarter-over-quarter increase.

Corporate Developments:

  • Signed definitive agreement in December to acquire PharmaCann in an
    all-stock transaction. The transaction will double MedMen’s geographic
    footprint to 12 states, which account for over 50% of the U.S.
  • Expanded California footprint into Northern California through the
    signing of definitive agreements for the acquisitions of a retail
    license in Emeryville and a microbusiness license for retail,
    distribution, cultivation and manufacturing cannabis onsite in San
    Jose. The first transaction closed in Q2 2019 and the second
    transaction closed in Q3 2019.
  • Signed definitive agreement to acquire the retail operations and
    license for a store in Santa Ana, California, through an all-stock
    transaction with Captor Capital Corp. This location was already
    operating under the MedMen brand through a management contract.
    Transaction closed in Q3 2019.
  • Closed on acquisition of Omaha Management Services, LLC, which owns
    Monarch, a Arizona-based vertically-integrated medical license holder
    with a flagship retail location in Scottsdale, plus cultivation and
    processing operations.

Brand Strategy:

  • Launched a comprehensive suite of new cannabis products under the
    brand [statemade], which are currently being sold in MedMen’s Nevada
  • Announced the completion of investment in California-based flower
    brand Old Pal, which provides every day, high-quality cannabis flower
    for customers.


  • Appointed Michael Kramer as chief financial officer. Mr. Kramer offers
    three decades of retail experience and has excelled in both
    operational and financial roles, including as CFO of high-profile
    retailers such as Apple Retail Inc., Forever 21, and Abercrombie &
  • Appointed Ben Cook as chief operating officer. Mr. Cook has extensive
    experience leading omnichannel distribution, global market expansion
    and supply chain optimization. His experience executing complex
    strategies for global, high-growth companies, including Apple, Sam’s
    Club, and Target is invaluable to MedMen’s growing multi-state
    operations and expansion plans.

Capital Markets and Financing Activities:

  • Announced relationship with newly formed Treehouse Real Estate
    Investment Trust (“Treehouse”), a cannabis-focused REIT that has now
    raised $133 million to acquire properties from MedMen and other
    cannabis real estate.
  • Closed a $77 million senior secured term loan with funds managed by
    Hankey Capital and with an affiliate of Stable Road Capital.
  • Closed, on December 5, a $56 million bought deal equity financing,
    issuing 13,640,000 units at a price per unit of $4.11, with each unit
    being comprised of one Class B subordinate voting share and one Class
    B subordinate voting share purchase warrant. The exercise price of
    such warrants is US$5.16 per share and they are exercisable for a term
    expiring on September 27, 2021.
  • Uplisted to the OTCQX® Best Market by OTC Markets Group under the
    ticker symbol “MMNFF” on October 24.

Subsequent Events

Corporate Developments:

  • Closed acquisition of Seven Point, a licensed medical cannabis
    dispensary located in Oak Park, Illinois.
  • Closed acquisition of Kannaboost Technology Inc. and CSI Solutions
    LLC, collectively referred to as “Level Up,” in a cash and stock
    transaction valued at $33 million on February 12, 2019. Level Up holds
    licenses for two vertically-integrated operations in Arizona,
    including retail locations in Scottsdale and Tempe and 25,000 square
    feet of cultivation and production capacity in Tempe and Phoenix. The
    Company also received a 40% stake in top-selling brand K.I.N.D.
    Concentrates, which is currently distributed in over 90% of the
    dispensaries in Arizona.

Capital Markets and Financing Activities:

  • Completed the sale of three properties to Treehouse for net proceeds
    of approximately $18.4 million, after repayment of debt.

Second Quarter Fiscal Year 2019 Review

In an effort to increase transparency, provide a better understanding of
MedMen’s business, and ensure sales comparability between years, the
Company is basing accounting on the 4-5-4 calendar structure.
Additionally, the Company is now breaking out performance in the MD&A by
retail, cultivation and manufacturing, corporate SG&A and pre-opening

For the second quarter of fiscal 2019, systemwide revenue was $29.9
million. This represents a 39.1% quarter-over-quarter increase over the
first quarter of fiscal 2019 ended September 30, 2018. Systemwide
revenue, pro forma to include pending acquisitions that have not yet
closed, would have been $49.5 million for the quarter.

Retail: Systemwide retail revenue for the quarter
is based on 16 retail stores that were operational at the end of the
quarter. This includes the MedMen Paradise location near McCarran
International Airport in Las Vegas, which opened in October, and the
MedMen Scottsdale location in Arizona, which began to be included in
MedMen’s results in December following the closing of the Monarch

Strong systemwide retail revenue for the quarter is primarily
attributable to MedMen’s stores in Southern California’s recreational
market. In California, the Company’s eight retail locations reported a
combined $23.7 million in revenue, which represents a 28%
quarter-over-quarter increase.

Cultivation and Manufacturing: For the second quarter of
fiscal 2019, the Company reported a $4.9 million EBITDA loss for
cultivation and manufacturing, of which approximately $4 million is
related to costs associated with the Company’s first full-scale factory,
Project Mustang in Nevada, which has already begun producing [statemade]

Corporate SG&A: During the second quarter, the Company
continued to make significant investments in building the corporate
infrastructure and team required to execute its strategy for long-term
growth. Corporate SG&A includes corporate infrastructure and growth
initiatives such as corporate payroll, sales and marketing, technology,
among other things. Of the total $40.9 million corporate SG&A expenses,
$14.4 million was corporate payroll, which included the buildout of
several teams within the Company including finance and accounting,
digital, business intelligence and marketing. SG&A expenses also
included $8.6 million in marketing and branding as compared to $4.8
million in the first quarter of 2019.

Pre-Opening Expenses: The Company incurred $3.0 million of
pre-opening expenses in the second fiscal quarter of 2019, primarily
driven by rent expenses of retail stores, cultivation/manufacturing
sites and facilities that are not yet operational.

Gross profit for the second quarter, before biological asset adjustment,
was $13.3 million, as compared to $0.5 million in the second fiscal
quarter of last year. For the second quarter, gross profit margin after
biological asset adjustment was 53%, compared to 45% in the previous

For the second quarter 2019, the Company reported a total net loss of
$64.6 million compared to a net loss of $66.5 million for the first
quarter. Net loss per share attributable to the Company in the second
quarter was $0.25 versus a net loss of $0.27 for the first quarter.


Additional information relating to the Company’s second quarter 2019
results is available in the Company’s Interim Financial Statements and
related Management Discussion & Analysis (“MD&A”) filed on SEDAR at

MedMen refers to certain non-IFRS financial measures such as annualized
sales per square foot, Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA), Four Wall EBITDA, and adjusted EBITDA (earnings
defined as earnings before interest, taxes, depreciation, amortization,
less certain non-cash equity compensation expense, including one-time
transaction fees and all other non-cash items). These measures do not
have any standardized meaning prescribed by IFRS and may not be
comparable to similar measures presented by other issuers.

Please see the supplemental information (unaudited) regarding non-IFRS
financial measures at the end of this press release and the MD&A for
more detailed information regarding non-IFRS financial measures.


MedMen Enterprises will host a conference call and audio webcast with
Chief Executive Officer and Co-Founder Adam Bierman and Chief Financial
Officer Michael Kramer today at 5:00 pm Eastern to discuss the financial
results in further detail.

Webcast Information:

A live audio webcast of the call will be available on the Events and
Presentations section of MedMen’s website at:

Calling Information:

Toll Free Dial-In Number: (844) 559-7829
International Dial-In
Number: (647) 689-5387
Conference ID: 9283806


MedMen is a cannabis retailer with operations across the U.S. and
flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission
is to provide an unparalleled experience that invites the world to
discover the remarkable benefits of cannabis because a world where
cannabis is legal and regulated is a safer, healthier and happier world.

Learn more at

California Market Share by Revenue

For the 13 weeks ended December 29, 2018, the State of California
collected $50.8 million in excise taxes at a rate of 15%, which equates
to approximately $338.7 million in retail sales according to the
California Department of Tax and Fee Administration (see
The Company’s California stores reported $23.7 million in revenue over
the same period, which equates to an approximate 7% market share.

Cautionary Note Regarding Forward-Looking Information and Statements

This press release contains certain “forward-looking information” within
the meaning of applicable Canadian securities legislation and may also
contain statements that may constitute “forward-looking statements”
within the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Such forward-looking
information and forward-looking statements are not representative of
historical facts or information or current condition, but instead
represent only MedMen’s beliefs regarding future events, plans or
objectives, many of which, by their nature, are inherently uncertain and
outside of MedMen’s control. Generally, such forward-looking information
or forward-looking statements can be identified by the use of
forward-looking terminology such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate”, or “believes”, or
variations of such words and phrases or may contain statements that
certain actions, events or results “may”, “could”, “would”, “might” or
“will be taken”, “will continue”, “will occur” or “will be achieved”.
The forward-looking information and forward-looking statements contained
herein may include, but are not limited to, information concerning the
proposed acquisition of PharmaCann LLC (the “PharmaCann Acquisition”),
expectations regarding whether the PharmaCann Acquisition will be
consummated, including whether conditions to the consummation of the
PharmaCann Acquisition will be satisfied and whether the PharmaCann
Acquisition will be completed on the current terms, the timing for
completing the PharmaCann Acquisition, expectations for the effects of
the PharmaCann Acquisition (including on the Company’s footprint and
asset base) on the ability of the Company to successfully achieve
business objectives, expectations regarding the number and location of
additional stores to be opened by the Company in the next 90 days and
during calendar 2019 and expectations for other economic, business,
and/or competitive factors.

By identifying such information and statements in this manner, MedMen is
alerting the reader that such information and statements are subject to
known and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements of
MedMen to be materially different from those expressed or implied by
such information and statements. In addition, in connection with the
forward-looking information and forward-looking statements contained in
this press release, MedMen has made certain assumptions. Among the key
factors that could cause actual results to differ materially from those
projected in the forward-looking information and statements are the
following: the inability to consummate the PharmaCann Acquisition; the
failure to obtain requisite regulatory approvals and third party
consents and the failure to satisfy other conditions to the consummation
of the PharmaCann Acquisition, which could impact closing or closing on
the proposed terms and schedule; the potential impact of the
announcement or consummation of the PharmaCann Acquisition on
relationships, including with regulatory bodies, employees, suppliers,
customers and competitors; changes in general economic, business and
political conditions, including changes in the financial markets;
changes in applicable laws; compliance with extensive government
regulation; and the diversion of management time on the PharmaCann
Acquisition. Should one or more of these risks, uncertainties or other
factors materialize, or should assumptions underlying the
forward-looking information or statements prove incorrect, actual
results may vary materially from those described herein as intended,
planned, anticipated, believed, estimated or expected.

Although MedMen believes that the assumptions and factors used in
preparing, and the expectations contained in, the forward-looking
information and statements are reasonable, undue reliance should not be
placed on such information and statements, and no assurance or guarantee
can be given that such forward-looking information and statements will
prove to be accurate, as actual results and future events could differ
materially from those anticipated in such information and statements.
The forward-looking information and forward-looking statements contained
in this press release are made as of the date of this press release, and
MedMen does not undertake to update any forward-looking information
and/or forward-looking statements that are contained or referenced
herein, except in accordance with applicable securities laws. All
subsequent written and oral forward-looking information and statements
attributable to MedMen or persons acting on its behalf is expressly
qualified in its entirety by this notice.

AS OF DECEMBER 29, 2018 AND JUNE 30, 2018
(Amounts Expressed in United States Dollars Unless Otherwise

December 29,

June 30,


Current Assets:
Cash and Cash Equivalents $ 78,219,490 $ 79,159,970
Restricted Cash 3,164,980 6,163,599
Accounts Receivable 534,283 318,159
Current Portion of Prepaid Rent – Related Party 1,922,038 1,898,863
Prepaid Expenses 16,044,104 9,387,047
Biological Assets 2,672,981 1,952,580
Inventory 13,133,638 6,248,754
Other Current Assets 22,357,390 2,790,772
Due from Related Party   5,999,146     3,509,035  
Total Current Assets 144,048,050 111,428,779
Prepaid Rent – Related Party, Net of Current Portion 1,681,474 2,652,149
Property and Equipment, Net 131,004,726 88,748,447
Intangible Assets, Net 96,339,102 48,792,757
Goodwill 84,818,127 18,165,161
Other Assets   8,561,933     12,403,049  
TOTAL ASSETS $ 466,453,412   $ 282,190,342  
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 26,204,120 $ 18,001,505
Other Current Liabilities 14,856,540 1,186,148
Derivative Liabilities 7,089,100
Current Portion of Finance Lease Liability 307,181
Current Portion of Notes Payable 33,487,387 52,353,625
Due to Related Party   5,798,301     9,858,445  
Total Current Liabilities   87,742,629     81,399,723  
Non-Current Liabilities:
Finance Lease Liability, Net of Current Portion 6,539,888
Other Non-Current Liabilities, Net of Current Portion 17,547,652
Notes Payable, Net of Current Portion   62,920,336     3,593,334  
Total Non-Current Liabilities   87,007,876     3,593,334  
TOTAL LIABILITIES   174,750,505     84,993,057  
Share Capital 288,042,748 129,145,994
Additional Paid-In Capital 80,071,402 47,091,271
Accumulated Deficit   (97,810,015 )   (66,647,221 )
Total Equity Attributable to Shareholders of MedMen 270,304,135 109,590,044
Non-Controlling Interest   21,398,772     87,607,241  
TOTAL SHAREHOLDERS’ EQUITY   291,702,907     197,197,285  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 466,453,412   $ 282,190,342  
(Amounts Expressed in United States Dollars Unless Otherwise
13 Weeks Ended Three Months Ended 26 Weeks Ended Six Months Ended
December 29, December 31, December 29, December 31,
2018 2017 2018 2017
Revenue $ 29,930,358 $ 3,075,187 $ 51,390,553 $ 4,881,742
Cost of Goods Sold   16,629,783     2,564,202     26,439,116     3,768,988  
Gross Profit Before Fair Value Adjustments 13,300,575 510,985 24,951,437 1,112,754
Changes in Fair Value of Inventory Sold (244,343 ) (2,196,924 )
Unrealized Gain on Changes in Fair Value of

Biological Assets

  2,878,271         2,882,915      
Gross Profit   15,934,503     510,985     25,637,428     1,112,754  
General and Administrative 65,696,688 9,531,722 131,436,138 14,668,415
Sales and Marketing 8,602,293 357,299 13,402,526 528,081
Depreciation and Amortization   3,423,677     708,783     5,873,997     1,387,001  
Total Expenses   77,722,658     10,597,804     150,712,661     16,583,497  
Loss from Operations   (61,788,155 )   (10,086,819 )   (125,075,233 )   (15,470,743 )
Other Expense (Income):
Interest Expense 2,886,674 669,130 5,296,706 1,017,717
Interest Income (284,889 ) (284,889 )
Amortization of Debt Discount 1,384,186 1,442,944
Change in Fair Value of Derivative Liabilities (5,389,178 ) (6,163,107 )
Unrealized Gain on Changes in Fair Value

of Investments

(1,194,000 ) (1,194,000 )
Other Expense   3,152,422         3,258,049      
Total Other Expense (Income)   555,215     669,130     2,355,703     1,017,717  
Loss Before Provision for Income Taxes (62,343,370 ) (10,755,949 ) (127,430,936 ) (16,488,460 )
Provision for Income Taxes   2,226,849     275,878     3,635,507     275,878  
Net Loss and Comprehensive Loss (64,570,219 ) (11,031,827 ) (131,066,443 ) (16,764,338 )
Net Loss and Comprehensive Loss

Attributable to Non-Controlling Interest

  45,885,355         99,903,648     423,804  
Net Loss and Comprehensive Loss

Attributable to MedMen Enterprises Inc.

$ (18,684,864 ) $ (11,031,827 ) $ (31,162,795 ) $ (16,340,534 )
Loss Per Share – Basic and Diluted
Attributable to MedMen Enterprises


$ (0.25 ) $ (0.57 )
Weighted-Average Shares Outstanding –

Basic and Diluted

  74,243,033     54,950,660  
DECEMBER 31, 2017
(Amounts Expressed in United States Dollars Unless Otherwise
26 Weeks


Six Months Ended
December 29, December 31,
2018 2017



Net Loss $ (131,066,443 ) $ (16,764,338 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating
Unrealized Gain on Changes in Fair Value of Biological Assets (2,882,915 )
Changes in Fair Value of Inventory Sold 2,196,924
Depreciation and Amortization 6,324,661 1,500,431
Amortization of Debt Discount and Loan Origination Fees 2,001,820
Loss on Sale of Property 2,626,216
Accretion of Deferred Gain on Sale of Property (84,995 )
Unrealized Gain on Change in Fair Value of Investments (1,194,000 )
Loss on Extinguishment of Debt 715,979
Share-Based Compensation 22,653,899 539,916
Shares Issued for Acquisition Costs 747,562
Change in Fair Value of Derivative Liabilities (6,163,107 )
Changes in Operating Assets and Liabilities:
Accounts Receivable (183,324 ) (323,290 )
Prepaid Rent – Related Party 947,500 1,100,000
Prepaid Expenses (6,657,057 ) (2,150,754 )
Other Current Assets (7,777,816 )
Biological Assets (34,410 )
Inventory (5,247,388 ) (8,224,108 )
Due from Related Party (2,490,111 ) (5,618,504 )
Other Assets 3,841,116 (455,502 )
Accounts Payable and Accrued Liabilities 6,988,188 15,187,349
Other Current Liabilities (6,204,608 ) (1,464,568 )
Due to Related Party   (4,060,144 )   (2,098,270 )
NET CASH USED IN OPERATING ACTIVITIES   (125,002,453 )   (18,771,638 )
Purchases of Property and Equipment (55,261,730 ) (13,263,308 )
Investments (8,304,833 )
Proceeds from Sale of Property 24,073,319
Purchase of Intangible Assets (1,260 )
Purchase of Management Agreement (2,000,000 )
Acquisition of Businesses, Net of Cash Acquired (30,686,541 )
Restricted Cash   2,998,619     (472,136 )
NET CASH USED IN INVESTING ACTIVITIES   (67,181,166 )   (15,736,704 )
Issuance of MedMen Corp Redeemable Shares for Cash 115,289,679
Exercise of Warrants for MedMen Corp Redeemable Shares 8,521,268
Contributions from Members 21,904,035
Proceeds from Issuance of Notes Payable 93,943,539
Principal Repayments of Notes Payable (24,739,101 ) (3,959,965 )
Principal Repayments of Capital Lease Liability (42,775 )
Debt Issuance Costs (2,019,472 )
Cash Received from Issuance of Class D Units 9,850,000
Contributions – Non-Controlling Interest   290,000     4,231,214  
NET CASH PROVIDED BY FINANCING ACTIVITIES   191,243,139     32,025,284  
Cash and Cash Equivalents, Beginning of Period   79,159,970     5,720,026  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 78,219,490   $ 3,236,968  
Interest $ 3,732,632 $ 762,657
Net Assets Acquired through Management Agreement $ $ 4,690,505
Derivative Liability Incurred on Issuance of Equity $ 13,252,207 $
Issuance of Subordinate Voting Shares for Other Assets $ 1,946,290 $
Issuance of MedMen Corp Redeemable Shares for Other Assets $ 343,678 $
Redemption of MedMen Corp Redeemable Shares $ 17,994,369 $
Debt Discount Recognized Upon Issuance of Warrants $ 18,694,985 $
Debt Discount Recognized Upon Issuance of Subordinate Voting Shares $ 185,511 $
Conversion of Convertible Notes into Equity $ 3,802,381 $
Issuance of MedMen Corp Redeemable Shares for Repayment of Notes
$ 6,759,125 $
Asset Acquired Under Sales-Leaseback (Finance Lease) $ 6,889,844 $
Issuance of Note Payable Related to Purchase of Management Agreement $ $ 2,000,000
Deferred Gain on Sales/Leaseback $ 5,666,274 $
Issuance of Note Payable Related to Purchase of Property and
$ $ 2,025,000


Adam Bierman
Chief Executive Officer
(855) 292-8399


Briana Chester
Senior Publicist


Stéphanie Van Hassel
of Investor Relations

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