CHICAGO–(BUSINESS WIRE)–PharmaCann LLC (“PharmaCann” or the “Company”), one of the largest private cannabis companies in the U.S., today announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), has expired with respect to the proposed acquisition by MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen”), a leading cannabis retailer with operations across the U.S.
“PharmaCann’s vision is to improve the quality of life for all through the production and responsible dispensing of cannabis-related products. We look forward to working towards closing the transaction with MedMen, and upon closing, we are excited to begin working hand-in-hand with the MedMen team, generating significant value for stakeholders and customers of both companies,” said PharmaCann Chief Executive Officer, Brett Novey.
Unaudited GAAP Financials:
For the calendar second quarter 2019, PharmaCann’s revenue totaled $17.5 million, up 184% over second quarter 2018. Year-over-year revenue growth was driven by the organic growth of the Company’s retail and wholesale operations in New York, Illinois, and Massachusetts, where it operates one of the highest performing dispensaries in the state. PharmCann’s second quarter revenue was generated from four of the seven states in which it holds licenses: New York, Illinois, Massachusetts and Maryland. In the third quarter, the Company expects to generate additional revenue from Pennsylvania, where it is licensed for up to nine retail locations, and Ohio.
As of June 30, 2019, total Company assets were $160.1 million, which included $14.0 million in cash and cash equivalents, $29.3 million in inventory and $81.4 million in property, plant and equipment.
Calendar Year 2018/2019 Revenue Summary:
(Currency in USD; $ in MM’s)
Wholesale Revenue 1
1 Q1 2019 wholesale revenue benefited from several new wholesale orders in New York as new registered organizations began to open retail locations in early 2019.
On December 24, 2018, MedMen announced that it entered into a definitive business combination agreement to acquire PharmaCann in an all-stock transaction. On March 15, 2019, pursuant to the HSR Act, PharmaCann and MedMen each received a request for additional information (the “Second Request”) from the U.S. Department of Justice Antitrust Division (the “Department of Justice”). On August 9, 2019, PharmaCann and MedMen declared substantial compliance with this Second Request. On September 9, 2019, the waiting period for the HSR Act, which was extended for 30 days after both companies substantially complied with the Second Request, expired. Following the satisfaction of this condition, PharmaCann anticipates being able to close the transaction with MedMen pending further state approvals, and subject to any divestiture, spin-off, or holdback for certain state licenses held by PharmaCann.
As consideration for the transaction, PharmaCann shareholders are expected to receive approximately 168.4 million subordinate voting shares in the combined company, based on MedMen’s fully-diluted shares outstanding as of June 29, 2019. The total share consideration is subject to change based on MedMen’s fully-diluted shares outstanding as of the closing date of the transaction.
Please refer to the Company’s filings available on MedMen’s profile at www.sedar.com for additional details regarding the transaction.
PharmaCann is currently licensed for up to 29 retail locations and 7 cultivation and processing facilities across 7 states, with a focus on limited license vertically-integrated markets.
- Illinois: On June 25, 2019, Illinois Governor J.B. Pritzker signed a landmark bill legalizing adult cannabis use in the state beginning January 1, 2020. This legalization is projected to generate approximately US$2 billion in annual sales as well as 23,000 new jobs for Illinois a few years after the program launches. PharmaCann expects to become a prominent retailer in Illinois with a total of 10 store locations, the maximum number of retail stores a single company can operate based on state regulations. Subsequent to the quarter end, the Company began actively securing retail leases in high-traffic locations across greater Chicago in advance of recreational sales. In addition, PharmaCann is doubling its cultivation facility capacity in preparation for increased demand beginning January 1, 2020.
- New York: The Company is currently one of ten registered organizations in the state of New York and operates one cultivation and manufacturing facility and four retail stores across the state. With approximately 90,000 square feet of cultivation and manufacturing capacity currently operating, PharmaCann is a leading wholesale provider in the state with six of the remaining nine registered organizations currently purchasing product from the Company. With over 40 acres of land under control, as the market matures, the Company has the ability to expand its facility to over 10 times its current capacity.
- Massachusetts: The Company currently operates one retail store in Wareham, MA, where it began selling recreational cannabis to customers in December 2018. The retail store is currently one of the best-performing stores in the state, serving over 1,000 customers per day. The Company is also continuing to progress toward the opening of its second recreational store in Shrewsbury, MA, which is expected to be operational in early 2020. PharmaCann has a host community agreement for a third retail location in Franklin, MA and is awaiting state licensing. In 2019, the Company began construction of a 50,000 square foot cultivation and processing facility in Holliston, MA, which is expected to be completed in early 2020.
- Pennsylvania: PharmaCann was awarded the ability to open a total of nine retail locations across the state through multiple rounds of competitive applications. The Pennsylvania medical marijuana program remains one of the fastest growing programs in the country, with over 180,000 certified patients and sales approximating those of both Illinois and New York combined. The Company plans to open the first of its nine dispensaries in the Manayunk section of Philadelphia during the third quarter. PharmaCann is also in the process of building out its 60,000 square foot cultivation and production facility after being awarded one of 25 cultivation and processing licenses in the state from among 300 applicants. The Company expects the facility to be operational in 2020.
- Ohio: The Company is currently licensed as a vertically-integrated operator in Ohio. In 2018, PharmaCann was awarded one of 15 large-class cultivation licenses in Ohio and in 2019, was awarded a processing license. The dispensary license was awarded to the Company through a competitive application process that included 370 applicants competing for 60 licenses. Located in the heart of the Columbia Township, PharmaCann’s Cincinnati retail location is the first dispensary to be open in the Cincinnati area. The Company’s cultivation and processing facility, located in Buckeye Lake, is currently under construction with an expected completion date by the end of calendar 2019.
- Maryland: The Company currently operates one retail store in Maryland, which is located in Rockville, and plans to expand its footprint in the state through acquisitions.
- Virginia: In 2018, PharmaCann was awarded one of only five licenses, which allow for cultivation, processing and retail. The Virginia program is currently a low-THC program with sales expected to commence in January 2020. The cultivation and processing facility is currently under construction and expected to become fully operational in early 2020.
- New Jersey: On August 21, 2019, PharmaCann and MedMen submitted a joint application for dispensary licenses in New Jersey. This is the first license application that will benefit from the combined strengths of both PharmaCann and MedMen. Results from the application process are expected to be announced in the fourth quarter of 2019.
- Real Estate: On August 12, 2019, Innovative Industrial Properties (“IIP”) announced that it closed on an acquisition of a property in Pennsylvania and entered into a long-term lease and development agreement with a subsidiary of PharmaCann for an approximately 23,000 square foot industrial facility and an approximately 31,000 square foot greenhouse facility on the property. IIP will provide reimbursement of up to approximately $29.1 million for the construction of the facility.
- Line of Credit: In March 2019, in accordance with the structure of its transaction with MedMen, the Company entered into a line of credit with MedMen, which as of the date of this press release totaled $20.0 million. Upon the successful completion of the transaction, the principal balance of the loan plus any accrued interest will be characterized as an intercompany loan.
PharmaCann LLC is one of the largest medical cannabis providers in the nation, with eleven dispensary locations and three production facilities currently operating across multiple states. Focused on elevating the role of cannabinoid-based therapies in the healthcare industry, PharmaCann offers pharmaceutical grade cannabis products to patients looking for relief from qualifying medical conditions. For more information about PharmaCann, please visit www.pharmacann.com.
MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission is to provide an unparalleled experience that invites the world to discover the remarkable benefits of cannabis because a world where cannabis is legal and regulated is a safer, healthier and happier world. Learn more at www.medmen.com.
Forward Looking Statements:
This press release contains “forward-looking statements”. Forward-looking statements can be identified by words like “may,” “will,” “likely,” “should,” “expect,” “anticipate,” “future,” “plan,” “believe,” “intend,” “goal,” “seek,” “estimate,” “project,” “continue,” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties which forward-looking statements are subject to include but are not limited to: the ability to obtain all requisite regulatory approvals and the satisfaction of all conditions to be met under the business combination agreement with MedMen.
The forward-looking statements included in this press release are made only as of the date of this release, and PharmaCann does not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.