The legal marijuana industry is now made up of chain stores which could be a billion-dollar idea.
MedMen has sold a minority stake of the company to a Canadian investment firm at a $1 billion valuation, making it the first US cannabis startup company gain a gigantic status. The cannabis retail company administers 11 marijuana dispensaries all over California, New York, and Nevada. According to Daniel Yi, vice president of corporate communications at MedMen, the company rounded up a $41 million round of funding which was headed by the Toronto-based firm Captor Capital who bought 2.5% of the shares of MedMen.
MedMen was established in 2010, and since then, it has worked on its objective of mainstreaming marijuana in America. Customers can conveniently buy marijuana edibles, vaporizers, and a flower placed on sleek wooden tables alongside iPads.
They have experienced budtenders who have explicit knowledge of the products and give suggestions based on user preferences. According to Yi, the activities of MedMen can be compared to what Nordstrom did for luxury brands and what Whole Foods did for organic grocery items.
Since the discovery of MedMen, the company quickly rose from one pot shop in West Hollywood to 11 dispensaries all over the U.S. The company also employs about 700 people, with 100 workers located at the headquarters in Culver City, California. The remaining 600 workers work in cultivation, processing, operations, and retailers nationwide.
MedMen is yet to acquire licenses to produce and sell marijuana at all of its 18 properties, which include dispensaries, farms and processing facilities. This is because the company raises its capital through private equity and partners with licensed businesses to control facilities on their behalf.
Usually, a low-class dispensary is renovated using the MedMen branding, which comes with its reputation. MedMen cuts its own share of the revenue. This strategy permits MedMen to enter markets such as New York, which issue only specific amounts of licenses for the cultivation distribution, and retail of marijuana cultivation. Earlier this year, MedMen bought bankrupt cannabis company in New York in order to produce and sell marijuana in the state.
According to Yi, MedMen doesn’t actually own all the properties; some are only managed and operated by employees from MedMen but the license remains with the original holder.
A report from the Captor Capital states that the Canadian investment firm that bought 2.5% of MedMen, did a good job. Some Marijuana advocates have mocked the new valuation of MedMen.
According to the Marijuana Business Daily, deciding the value of a cannabis company is very intuitive due to the age of the industry, the wide variety of regulatory structures for each state, and the absence of top cannabis companies which can be used as benchmarks.
MedMen went public in late 2017. According to Yi, the company wants to list on the Canadian Securities Exchange, an alternative Canadian stock exchange that permits cannabis companies in the U.S to list in mid-2018. When MedMen becomes public, the company will use its new funding to maximize its market in California, Nevada, and New York.
In January 2018, California started selling recreational marijuana which has made it become America’s largest legal market. According to Yi, the gigantic status of the company is justified by reports that the legal marijuana industry will become a billion dollar industry by 2021. But as the marijuana industry continues to grow, markets tend to grow and the criticism surrounding cannabis disappears.
