MedMen Enterprises Inc. (CSE:MMEN) (OTCQB:MMNFF) led the gainers Friday closing up 28.36 percent to $5.7122. The stock also hit an all-time high of $6.12 Friday afternoon, but it fell shortly before market close.
Such incredible gains in a bearish marijuana market follow the announcement of its $682 million acquisition of PharmaCann LLC, a U.S.-based medical marijuana dispensary. With the acquisition, they will up there licensed locations to 12 states within the United States, and it will put them amongst the largest cannabis companies in the world.
"This is a transformative acquisition that will create the largest U.S. cannabis company in the world's largest cannabis market," said Adam Bierman, MedMen's chief executive officer, and co-founder. "The transaction adds tremendous scale to our vertically integrated business model by expanding our U.S. retail footprint across important growth markets while strengthening our cultivation and production capabilities.
Following the acquisition, PharmaCann shareholders will own roughly 25 percent of the newly merged MedMen company. The transaction will double the market reach following the acquisition, a huge win for MedMen and PharmaCann. According to an analysis done by Cowen Group, the combined addressable market in these 12 states accounts for over 50 percent of the total estimated $75 billion 2030 U.S. addressable market.
MedMen went public via a reverse takeover deal with Ladera Ventures this past May. The initial public offering valued the company at around $1.65 billion and yielded a return of 68.29 percent since its IPO compared to the S&P500 index which has only experienced a 1.58 percent return during the same timeframe. Shortly following the IPO, the company engaged in a “bought deal” with Canadian investors to buy 13.6 million shares of the stock at $4.17.
About the companies involved in the merger transaction
MedMen owns and operates cannabis facilities involved in the cultivation, manufacturing, and retail of legal marijuana, while employing over 800 people across the U.S. Based out of Los-Angeles, MedMen comes with its share of controversy as well. Earlier this year the company was accused of stealing its employee's tips in a much-publicized scandal, leaving many investors to wonder about their day-to-day practices.
PharmaCann was founded in 2014 and dispenses medicinal cannabis products for adult and pediatric patients in eight states. According to the company’s website, their company vision is to “improve the quality of life for people through discovery, production and responsible dispensing of cannabis-related products.”
What the future might hold for MedMen
MedMen has surely started to make a name for itself in the cannabis industry with this transaction amongst others. Like many other marijuana stocks, the company has significant long-term growth potential, and business moves like this one are further steps forward towards their development.
They have tapped into the Canadian market with partnerships with big players like the joint venture with Cronos Group (NASDAQ:CRON), made a huge name for themselves in the United States, and now they have become one of the sector’s giants shaping the growing marijuana industry.