Med Men, the fall of a giant

MedMen, a Californian chain of cannabis stores once described as the 'Apple store of weed» valued at up to $1.7 billion, is on the verge of financial collapse.

The company said it had only $15.6 million in liquid assets, compared with $137.4 million in debt.

«The conditions described above raise significant doubts about the company's ability to meet its obligations for at least one year,» the company said.

MedMen also noted that «its liquidity requirements are significant and cannot be met with current cash flow from operations.»

MedMen was faced with a long list of challenges, ranging from the sale of its Florida assets for $16 million less than the initial offer, to the failed sale of its New York assets to multi-state cannabis operator Ascend Wellness.

MedMen said it would delay the opening of new stores, permanently or temporarily close underperforming stores and carry out other restructuring activities. The company is still looking for a buyer.

Shares in MedMen (MMEN) were trading at 4 cents on Tuesday on the Canadian Securities Exchange, down from $8 after its IPO.

The bursting bubble?

MedMen is just the latest in a long line of cannabis darlings facing a difficult situation, The industry bubble of five years ago is deflating due to excessive debt, falling cannabis prices, competition from illegal vendors and high taxes.

MedMen, based near Los Angeles, operates 23 stores, including in California, in New York and in Illinois. In a bid to cut costs, it sold its Florida stores last year, is trying to sell its New York stores and is also trying to renegotiate the leases on its remaining stores.

Shares in other cannabis companies also suffered as the cannabis sector lost its luster with investors. The stock of Tilray Brands, a cannabis producer that ranks among the industry's largest, lost more than 90 % from its all-time high, for example, while Canopy Growth, another major player, lost a similar amount.