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L.A. pot retailer MedMen has 12 shops, a $1.6-billion valuation and, coming soon, Canadian stock

MedMen CEO Adam Bierman at the cannabis company’s Venice shop. The Culver City-based company is going public, with shares set to begin trading on a Canadian stock next week. U.S. stock exchanges won’t list U.S. cannabis companies. (Ricardo DeAratanmha / Los Angeles Times)

They used to be drug dealers. Then they became dispensaries. Now we have cannabis retailers that “seek to replicate the Apple store model” and give customers “a comfortable, informative and nonthreatening environment.”

That’s how Culver City firm MedMen describes its pot shops in documents submitted as part of the company’s most audacious plan yet: to become the nation’s most valuable public cannabis company, worth more than $1 billion.

It’s a move that, perhaps even more than MedMen’s sleek stores on Santa Monica Boulevard and New York’s Fifth Avenue, illustrates how quickly cannabis is entering the mainstream — and how the nascent industry has captured investors’ attention even as it remains relegated to the fringes of the financial world.

MedMen, which has yet to post a profit, is not staging a traditional initial public offering. Instead, it’s acquiring and taking over an existing public shell. What’s more, the company’s shares, when they begin trading in the coming days, won’t be listed on the Nasdaq or the New York Stock Exchange.

Instead, they’ll be on the Canadian Securities Exchange, a second-tier stock market in Toronto that’s become a haven for cannabis companies.

Adam Bierman, MedMen’s co-founder and chief executive, said going public this way makes sense in the cannabis industry, where companies face a tangle of conflicting regulations but see immense opportunity requiring fast money.

“And how do I get that today, with the way the world is set up?” he said. “I get it by being public on the CSE in Canada.”

Despite being legal for medicinal or adult use in most U.S. states, cannabis remains illegal under federal law. Because of that prohibition, the major U.S. stock exchanges will not list cannabis firms that operate in the U.S. The Toronto Stock Exchange, Canada’s top trading venue, has a similar stance.

But the Canadian Securities Exchange, following guidance from that country’s securities regulators, said last year that it was willing to list such firms. The exchange is already home to several Canadian companies that have U.S. operations, and MedMen will become just the second U.S.-based cannabis company to list. New York cannabis investment firm iAnthus Capital went public on the CSE in 2016.

Many more companies will soon follow, said Dan Nichols, a director at cannabis advisory firm Ello in Century City. He expects dozens of U.S. cannabis firms to go public in Canada this year alone.

“It’s going to be a massive rush,” he said. “You might see 100 new companies go public on the CSE. Everyone is looking at Canada.”

A pedestrian passes the MedMen store on New York's Fifth Avenue. The company operates a dozen cannabis shops and is working on opening three more, including one on the Las Vegas Strip.
A pedestrian passes the MedMen store on New York’s Fifth Avenue. The company operates a dozen cannabis shops and is working on opening three more, including one on the Las Vegas Strip. (Richard Drew / AP)

 

Chicago cannabis grower and retailer Green Thumb Industries recently announced plans for a reverse merger with a defunct Canadian uranium mining firm. New York cannabis investment firm Acreage Holdings, which recently added former House Speaker John Boehner and former Massachusetts Gov. William Weld to its advisory board, also plans to go public, Weld told Fox Business News last month.

To Read The Rest Of This Article By James Rufus Koren on Los Angeles Times

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Published: May 25, 2018

Founder & Interim Editor of L.A. Cannabis News

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