MedMen Stock Tanks as Bankruptcy Rumors Swirl Online

MedMen stock

MedMen stock is sinking on Monday morning after rumors that MedMen Enterprises (CSE:MMEN) (OTCQX:MMNFF) had filed for bankruptcy were circulated on social media over the weekend. 

Damning Claims Against MedMen

According to messages posted by prominent pot stock investor Jason Stapafora, MedMen Enterprises has reportedly notified certain service providers that it is no longer in a position to pay its bills and has also begun offering 50% payment to certain creditors. Another message reshared by Stapafora was from Ben Schultz, a senior director at the firm, which appears to show him notifying a creditor that the company is unlikely to pay off certain invoices until a cash fusion in February or March. MedMen stock has dropped nearly 10% today. 

While all the claims made on the thread are as yet unverified, it does make for a damning reading list for the cannabis firm, which already had a less than perfect reputation. MedMen stock took a major hit in the early part of 2019 as the activities of the company’s management, under the leadership of founder and CEO Adam Biermen, came in for considerable scrutiny. In January, deposed CFO James Parker sued for wrongful dismissal, alleging a culture of financial mismanagement, which he described as a “spending addiction.”

>> HARV Stock Jumps on Strategic Partnership with Harvest of Battle Creek

In May, Parker added further allegations to his lawsuit against the company, with MedMen stock already down over 40% in the year to date. He claimed that Bierman and other board members conspired to engage in a short-term stock manipulation scheme that netted them “millions of additional dollars.” These claims appear to be backed up by Stapafora today

Financial Mismanagement Weighs on MedMen Stock 

This mismanagement inevitably translated onto the company’s books, with MedMen Enterprises being forced to seek emergency financing on more than one occasion after posting sizeable losses. During the last six months of 2018, MedMen lost US$131 million—more than $2 for every dollar of marijuana it sold. To cover those losses and fund its aggressive expansion plans, MedMen raised almost US$200 million from September through November 2018. By March 2019, it was gone.

MedMen stock continued to tank through the ensuing summer months, before the company posted a US$277 million yearly loss in October, almost double the previous year. However, last week, the company announced that it had secured a financing amendment that will see the removal of any penalty against it for the early repayment of the amounts outstanding upon 15 days’ notice. Perhaps this could be a preemptive move to soften the blow of bankruptcy?

>> Read More MedMen News

Featured image: Canva

If You Liked This Article Click To Share