A California-based multi-state operator (MSO) is backing out of one of its pending merger agreements due to the volatility the marijuana market has seen in the past few months.

MedMen Enterprises (CSE:MMEN,OTCQX:MMNFF) confirmed on Tuesday (October 8) that it will be terminating a planned union with privately owned PharmaCann.


The all-stock deal, originally valued at US$682 million, was first announced in October of last year; it was signed a few months later in an effort to expand MedMen’s reach across the country. The merger would have given the company operations in 12 states with a combined total of 79 cannabis facilities.

US Election 2020 and Cannabis

 
Investing in cannabis? Read what experts have to say about cannabis and the US Election!
 

Now, in light of a particularly dreary summer for the cannabis sector, MedMen is looking to narrow its plans to its currently existing addressable markets.

“The cannabis sector has evolved tremendously since we first announced the PharmaCann transaction and based on the current macro-environment and future opportunities that exist for our business, we believe it is now in the best interest of our shareholders to deepen, rather than widen, our company’s reach,” MedMen CEO Adam Bierman said.

MedMed shares dropped off over the course of the trading day on Tuesday, falling 9.2 percent from an open of C$2.18 to C$1.98 by 2:45 p.m. EDT.

The MSO said more value will be created by continuing to develop its branding, expanding its current position in California’s cannabis market and focusing on its digital platform. All these actions, according to the firm, will be more valuable long term over completing the acquisition.

The company said that due to the downward shift in both the American and Canadian cannabis industries since March of this year, it has taken a harder look at how it’s going to allocate capital.

Greg Cappelli, executive director at PharmaCann, said in a statement that the company’s board of directors is confident it will continue to grow as a business without the merger deal with MedMen.

It’s worth noting that MedMen isn’t coming away empty handed. As a part of the dissolution of the deal, PharmaCann has agreed to transfer some of its cannabis licenses and assets in Illinois and Virginia to MedMen instead of paying a traditional termination fee.

Being left with assets in Illinois is a “win” for the firm, Bierman said. A growing number of US states have legalized recreational marijuana use, and Illinois is the most recent addition.

The midwestern state legalized adult use back in June, becoming the first state to do so through its legislature, and the laws are set to come into effect in January 2020. In August, the state awarded its first retail licenses. According to Marijuana Business Daily, the state’s cannabis sector could generate up to US$2.5 billion a year once the legislation is in place.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Strong Innovation Pipeline Continues to Drive Market Share Growth
Broken Coast’s First Foray into Cannabis 2.0
Solei Introduces First Limited Release Vape on the Market
Solei, RIFF, Good Supply and B!NGO Expand Product Offerings

Aphria Inc. (” Aphria ” or the ” Company “) ( TSX: APHA and NASDAQ: APHA ), a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, today announced the expansion of its 510 Vape offering across its award-winning adult-use brand portfolio.

Keep reading... Show less

Zhang Investor Law announces a class action lawsuit on behalf of shareholders who bought shares of Aurora Cannabis Inc. (NYSE: ACB) between February 13, 2020 and September 4, 2020, inclusive (the “Class Period”). If you wish to serve as lead plaintiff, you must move the Court before the December 1 2020 DEADLINE . A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.

To join the class action, go to http://zhanginvestorlaw.com/join-action-form/?slug=aurora-cannabis-inc&id=2437 or call Sophie Zhang, Esq. toll-free at 800-991-3756 or email info@zhanginvestorlaw.com for information on the class action.

Keep reading... Show less

Nextleaf Solutions Ltd. (CSE: OILS) (OTCQB: OILFF) (“Nextleaf Solutions“, “OILS”, or the “Company”), Canada’s most innovative cannabis extractor, is pleased to provide the following commercial and intellectual property update:

Cannabis Extraction Agreement with White Label Producer

Keep reading... Show less

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Khiron Life Sciences Corp. (“ Khiron ” or, the “ Company ”) (TSXV: KHRN), (OTCQB: KHRNF), (Frankfurt: A2JMZC), a vertically integrated cannabis leader with core operations in Latin America and Europe, is pleased to announce that it has closed today its previously announced “bought deal” short form prospectus offering of units (“ Unit s ”), including the exercise in full of the over-allotment option (the “ Offering ”).

Keep reading... Show less

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos Group” or the “Company”), an innovative global cannabinoid company, today announced that Mike Gorenstein, Executive Chairman, is scheduled to speak on a panel at the Cowen 2020 Boston Cannabis Conference on Wednesday, December 2, 2020 at 9:20 a.m. EST.

For more information regarding the Cowen 2020 Boston Cannabis Conference please visit: https://www.cowen.com/conferences-and-events/3rd-annual-boston-cannabis-conference/

Keep reading... Show less