Tilray Acquires Outstanding MedMen Notes

Canadian cannabis company Tilray on Thursday acquired the majority of outstanding senior secured convertible notes of MedMen that were originally held by certain funds affiliated with Gotham Green Partners, LLC (GGP). Tilray said the deal—which is subject to regulatory approval—provides the company with “a path … to obtain a significant equity position in MedMen through the conversion of the notes and exercise of associated warrants following U.S. cannabis legalization.”

Irwin D. Simon, Tilray’s Chairman and CEO said the company has a “goal of $4 billion by revenue by the end of fiscal 2024. The investment we are announcing in MedMen securities today, one of the most recognized brands in the $80 billion U.S. cannabis market, is a critical step towards delivering on our objective as we work to enable Tilray to lead the U.S. market when legalization allows.”

“Our ability to maximize value from this game-changing transaction rests on the support of our shareholders at the upcoming Special Meeting to vote on our Authorized Shares Proposal, which will increase the number of authorized shares Tilray has available to not only complete this transaction, but also to execute on other strategic acquisitions. I cannot stress enough the importance of making our shareholders’ voices count to enable us to maximize our potential to create substantial value for our shareholders in the near-term and in the future.” — Simon in a statement

Tilray and its partners acquired an aggregate principal amount of approximately $165.8 million of the notes and the warrants, which were originally issued by MedMen and held by GGP. They represent 75% of the outstanding notes and 65% of the outstanding warrants, the company said in a press release.

Tilray’s interest in the limited partnership represents rights to 68% of the notes and related warrants held by the partnership, which are convertible into, and exercisable for, approximately 21% of the outstanding Class B subordinate voting shares of MedMen upon closing of the transaction.

During a conference call, Simon indicated Tilray could fully acquire MedMen once cannabis is fully legal in the U.S., Barron’s reports.

AdvisorShares Chief Operating Officer Dan Ahrens told Barron’s that Tilray was not actually buying a majority stake in MedMen due to current regulations, explaining that the Canadian firm is “buying convertible debt—and seem to be paying a lot for it.”