Wanting on the U.S. hashish market, Canadian firm Tilray is buying nearly all of MedMen’s debt

Tilray – a Canada-based global leader in cannabis research, cultivation, processing and distribution –announced on August 17th it acquired most of the debt that California-based MedMen Enterprises owes to New York hedge fund Gotham Green Partners and other funds. Tilray shares rose nearly five percent after announcing their investment.

This ultimately gives the Canadian cannabis producer a chance to acquire MedMen in the future, which could serve as an entry point into the U.S. market if cannabis is federally legalized.

Due to US federal law classifying cannabis as an illegal drug, non-US based companies cannot directly own a US cannabis business. With the accelerated momentum in the states across the country and the Introduction of the “Law on Cannabis Administration and Opportunities”, a cannabis reform bill tabled by Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman Ron Wyden, and Senator Cory Booker, Tilray and others are optimistic and preparing for possible change in the future.

Once the outstanding bonds and warrants are converted into shares, Tilrary will hold a minority interest in MedMen, although conversion of the interest is subject to regulatory approvals, U.S. legalization and additional factors. A full adoption can only come after federal cannabis legalization in the United States.

“Supported by the acceleration of global legalization trends, we are focused on building the world’s leading cannabis-focused consumer branding company with a goal of $ 4 billion in sales by the end of our fiscal year 2024,” said Tilray CEO Irwin Simon in the press release.

“What Medmen is doing for Tilray is that it gives us a great brand. Ultimately, legalization gives us the potential to have a great company that we can ultimately take to the rest of the world, ”said Simon in an interview with CNBC.

MedMen is a well-known brand although it has struggled with losses recently and is now valued at less than $ 200 million despite running 25 retail stores and expected to open more than five more this year.

MedMen will be out if the company repays its existing debt by 2028 before the bonds mature. MedMen announced separately It has successfully raised $ 100 million through an investment by Serruya Private Equity, based in Ontario, Canada. According to the press release, the money will allow MedMen to expand its operations in key markets such as California, Florida, Illinois and Massachusetts, and identify and accelerate further growth opportunities in the United States.

Tom Lynch, CEO of MedMen, said the investment was a “game changer” and predicted that it will give the company a “platform for our future growth”.

Tilray is growing up with MedMen

Tilray’s interest in MedMen follows this Tilray and Aphria Megafusion from May, which resulted in one of the largest, diversified cannabis, hemp, and beer companies in the world. Simon said in the press release back in May: “Our focus is now on executing our highest return priorities, including business integration and accelerating our global growth strategy.”

The company’s growth also puts Tilray in a solid position to pursue international opportunities with its medical cannabis brands, its distribution network in Germany, and the end-to-end European Union Good Manufacturing Practices supply chain that includes its facilities in Portugal and Germany.

Tilray is one of many companies in a plethora of industries looking to position themselves in the U.S. report of in case of federal legalization Reuters notes that US insurers are already preparing for expanded insurance needs for cannabis companies. From now on, insurers are regulated at the state level, so that a decriminalization of the federal government would immediately expand the market.

Several industries are trying to position themselves properly in the event of legalization, and while we don’t know if or when this will come, there are, for example, larger insurers such as Progressive Corp. Farmers Insurance, Liberty Mutual and AXA SA start offering coverage as more states legalize cannabis, often selling it through subsidiaries and partnering with CannGen or others, according to state licensing documents.

Speaking of Tilray’s next move, Simon said in the press release, “The investment we are announcing today in MedMen securities …

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