Faced with economic difficulties, Eaze verticalizes, MedMen rationalizes

While Eaze and MedMen had to lay off staff in late 2019, both companies are trying to bounce back, each with a different strategy. Eaze has announced a fundraising round to verticalize its operations and move into cannabis production, while MedMen has decided to focus on its retail network.

Eaze Raises $35 Million

Eaze, one of the major players in the cannabis delivery industry in California, said it had raised 35 million $ to verticalize its business and sell its own cannabis.

The funding round comes after the San Francisco-based company laid off approximately 20% of its workforce last October. It also announced that it is able to raise an additional 20 million $ in funding.

Eaze will continue to deliver cannabis products from other companies. However, its new strategy is expected to provide a «more sustainable and profitable» path as it expands its existing operations, CEO Ro Choy said in a statement. «Vertical integration is Eaze’s second act,» he noted.

Eaze is expected to launch its own brand portfolio in the coming weeks in partnership with licensed cannabis retailers across California. Eaze reports having 600,000 registered customers and has made more than 5 million cannabis deliveries since its launch.

MedMen makes it easy

Conversely, the MedMen chain of cannabis dispensaries plans to exit the cannabis cultivation and production business to focus on its retail stores.

«Although vertical integration has been a priority for the industry, we are increasingly convinced that the cannabis industry is evolving like any other vertically integrated sector: with a fragmented value chain and specialists at every level,» said declared Ryan Lissack, MedMen’s new interim CEO, at the conference announcing the company’s earnings.

The company reported quarterly revenue of $44.1 million, up 50% from the previous year. Its net loss increased from $18.7 million to $40.6 million.

In addition to outsourcing cultivation and production operations, MedMen plans to closely monitor each store to ensure it is profitable. If a store is not profitable, it may be closed temporarily or permanently.

«We cannot continue to invest in assets that do not generate short-term cash returns,» said Zeeshan Hyder, MedMen's chief financial officer.

The focus on retail is part of the new management team's efforts to secure liquidity following a period of excessive and rapid growth financed by debt.

«The board of directors is fully aware of the importance of raising additional capital,» said Executive Chairman Ben Rose. Rose noted that MedMen executives are in advanced discussions to secure long-term financing.