MedMen Enterprises Inc (MMEN)

[IndustryParticipant]

Some additional points most are note aware of:

"Because MedMen satisfied all the parts in the acquisition agreement, it will not incur a penalty for the termination, Bierman said. What’s more important: MedMen negotiated to obtain certain assets from Pharmacann, in compensation for the roughly $20 million loan that MedMen had invested into Pharmacann so far.

As part of the new deal, MedMen will get Pharmacann’s:
•Operational cultivation and production facility in Hillcrest, Illinois;
•A retail location in Evanston, Illinois;
•A retail license for Greater Chicago, Illinois;
•A license for a vertically-integrated facility in Virginia.
The assets in Illinois are of particular importance to MedMen, as the state has recently legalized recreational use of cannabis and the company is expanding its footprint in the state. Overall, Bierman believes MedMen cut a very good deal for these assets."

“We're getting what we believe to be about, you know, conservatively call it $75 million worth of assets,”

The Illinois adult use program, which launches January 1st granted ridiculous concessions to the existing dozen cultivators holding 20 licenses and sites to service the adult use market, which will be the 2nd largest in the nation until Florida or New York adult use commences.

Currently in IL, wholesales are near $4,000lb, on the shelf for $60-$80 an 1/8th of flower, and concentrates up to almost $100 a gram. Supply at the moment for a little more than 50,000 patients (50k......) is near zero, yet the same who cannot supply 50k market fought quite hard for exclusive rights for a 1MM+/$3B+ market).

The fine print here is the limited cultivation licenses can expand basically without limit. Future licenses are capped at 210,000 sq. ft., but is not clear for the existing cultivators. The point being, they can expand, today that facility as large and as much as they can afford and basically be guaranteed of every single gram produced being immediately sold for just about the highest prices in the nation for quite some time to come.

While there will be a small number of future cultivation licenses issued, it will not be enough, nor fast enough to most likely catch up with demand for years to come.

One can imagine the desirability of 2 adult use dispensaries (when they are limited) in Chicago metro.

Personally, I thought the original PCann deal was nonsensical ($682MM I believe) as the cost to develop those holdings was a fraction, and I'm of the school of developing things from scratch for pennies.

Even with potential restrictions on build out of 210,000 sq. ft., which I believe is only for future (10) cultivators (If they opt to open that process), that option alone is worth more than the entire $20MM.

There is further fine print there as the IL adult use grants existing medical additional adult use retail locations, and it isn't clear if they received the additional adult use locations (only), or the original (2) medical sites, which would carry onsite medical and adult use, and 2 additional off site adult use.

Much better deal as the original deal values each and every location and license at I believe $26MM.

There are currently, due to the above (limited licenses, serious supply and demand issues, enormous expansion for cultivation) endless buyers for IL market cultivation sites in the $20-$40MM range for existing facilities. Definitely sellers market.

IL adult use about to be one of the greatest adult use trainwrecks ever.....but for cultivators, the most profitable situation pretty much ever in the history of the industry. (dozen cultivators with 20 sites who can't supply 50k patients but granted the ability to expand without limit and exclusively service a 1MM+ person market)