U.S. cannabis retailer and cultivator MedMen reached a deal with Canadian investors to raise $57 million in financing and snapped up “prime retail locations” in Florida, capping a wild week for marijuana stocks.
Under the so-called “bought deal,” announced late Thursday, the Canadian investment companies — Eight Capital, Cormark Securities, along with a group of underwriters — agreed to buy around 13.6 million units of MedMen at a price of 5.50 Canadian dollars ($4.17).
In a bought deal, an investment bank agrees to purchase a company’s entire offering. MedMen said it will use the money to add more retail locations to “attractive cannabis markets” and build out its cultivation and production resources.
MedMen has also agreed to allow the underwriters an option to buy up to an extra 15% of the units at that price. If the underwriters exercise that option in full, MedMen would raise some 11.25 million Canadian dollars extra, or around $8.5 million. The closing date of the offering is set to take place on or around Sept. 28.
Marijuana Stocks Mixed After Big Week
MedMen, based in Los Angeles, began trading on the Canadian Securities Exchange in May. But among marijuana stocks trading in the U.S., Canopy Growth (CGC) crept 1.7% higher in the stock market today. Cronos Group (CRON) rose 3.2%, while recent marijuana IPO Tilray (TLRY) fell 2.8%.
Earlier this week, investors digested a biotech deal struck by Cronos, bold predictions about cannabis from the alcohol industry, a warning from the SEC and an analyst downgrade of Tilray.
For the week, Canopy Growth finished ahead 12.5%, Cronos leapt 21%, and Tilray has surged 19.5%.
The MedMen deal announced Thursday follows other big financial infusions in the marijuana industry. Hedge fund billionaire Leon Cooperman this year invested in the cannabis cultivator Green Thumb Industries, its founder said last week.
Earlier last month, Corona parent Constellation Brands (STZ) said it would invest nearly $4 billion in Canadian pot producer Canopy Growth.
In July, Acreage Holdings, a company backed by former House Speaker John Boehner and former Massachusetts Gov. Bill Weld, said it received $119 million in new funding.
Another Tobacco Company Eyes Weed
Meanwhile, tobacco giant Altria (MO), when asked at a conference Wednesday for its thoughts on cannabis, said it was “exploring options, and we’re mindful of the possibility that in the future cannabis may no longer be illegal under federal law.”
When asked by IBD earlier in the year about cannabis, the company said “Marijuana remains illegal under federal law and Altria’s companies have no plans to sell marijuana-based products.”
Altria’s exploration would follow an announcement in June that a subsidiary of U.K. tobacco company Imperial Brands (IMBBY) was investing in a medical marijuana research firm.
MedMen Comes To Florida
MedMen operates 19 licensed facilities in California, New York and Nevada, and recently obtained a license to do business in Florida.
Its retail locations, which have a minimalist layout and tablets displaying product information, have often been likened to Apple (AAPL) stores.
On Friday, MedMen said it had landed “prime retail locations” in Florida, with long-term leases in Miami Beach, Ft. Lauderdale, West Palm Beach, Key West and St. Petersburg.
The state could provide MedMen with a way to tap the state’s tourism and an older population that has increasingly turned to cannabis for pain relief.
“Florida is the third most populous state in the U.S. with a rapidly growing medical cannabis market and large potential adult use market,” MedMen said in a statement. “The state has high tourist activity and is home to the largest elderly community in the nation.”
The company on Friday also said it had closed an acquisition of a dispensary and a cultivation license from Treadwell Nursery, a Florida company that has been approved to grow marijuana. The license will allow MedMen to open as many as 35 medical cannabis dispensaries in Florida and also grow the plant there. The acquisition was first announced in June.
Last week, MedMen said that former Los Angeles Mayor Antonio Villaraigosa had joined its board of directors. The company also said it had appointed Benjamin Rose, chief investment officer of Wicklow Capital, as the nonexecutive chairman of its board.
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