Marijuana retail company MedMen is in the midst of a cash crunch in the industry, and it has been offering its vendors shares in the company in lieu of payment, according to a report Thursday (Jan. 23) by MarketWatch.
The company sent out an email offering options to vendors: the amount owed in MedMen class B non-voting shares, a payment plan or a one-time payment for half of what’s owed, in cash.
The company has been dealing with layoffs and restructuring as the marijuana industry continues to evolve, and the once cash-heavy investment industry is seeing less capital lately.
“As part of the restructuring, the company has been actively working with its retail vendors on modifying payment terms, which in some cases include stock consideration,” MedMen Chief Financial Officer Zeeshan Hyder said in an emailed statement, reports said.
The industry investment dried up in about March of last year, according to Viridian Capital Advisors data. Capital raises for companies went down about 20 percent in 2019 from a year before, to $11.3 billion.
Debra Borchardt, the Editor-In-Chief of Green Market Report, interviewed MedMen CEO Adam Bierman about the emails to vendors and asked if they were real.
“Those emails are absolutely, real emails. We’ve never denied those emails. We’ve been very forthright with the public, …” he said. “… we stopped payments to certain vendors as would be commonplace in the restructuring of a retailer. We turned over our accounts payable to a restructuring consulting firm (FTI Consulting) so that we could preserve and allocate the cash as we got through and out the other end of restructuring. These are brands that heavily rely upon MedMen for their business.”
MedMen isn’t the only supplier in the industry struggling to pay vendors. Eaze, who once referred to itself as the “Uber of pot,” is looking for funding as it struggles to pay debts as well. The company wants to raise $35 million in a Series D funding round.
Eaze has drained its reserves and is low on funds. It’s also struggling to pay its employees, even after a round of layoffs.