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Tilray Plots U.S. Entry With MedMen Stake

August 24, 2021

Tilray, one of Canada’s biggest cannabis players, has taken a significant stake in U.S. cannabis company MedMen, albeit in a roundabout fashion. Rather than making an agreement directly with MedMen for stock, Tilray has bought up convertible notes previously held by Gotham Green Partners. In total, the deal will see Tilray and other unspecified partner investors acquire $165.8 million of MedMen notes and warrants, representing 75% of all outstanding notes and 65% of outstanding warrants. With a 68% claim in the partnership, Tilray’s stake will ultimately translate into a 21% stake in MedMen, upon close of the transaction.

Further complicating the arrangement is the question of federal legalization in the U.S. Tilray’s ability to convert its notes and exercise its warrants is dependent on legalization at the federal level; while it could waive this caveat under the terms of the deal, doing so would jeopardize its place on the Canadian stock exchange. As payment to Gotham Green Partners, Tilray will issue approximately 9 million shares of its common stock to it, but if Tilray’s stockholders do not approve the deal by December 1 of this year, Gotham Green can take its payment in cash instead. MedMen did not receive any proceeds from the transaction.

MedMen operates 25 retail locations with a strong presence in California, particularly in Los Angeles and the greater San Francisco Bay area, along with outposts in Boston, Chicago, and Las Vegas. “Backed by accelerating trends towards legalization globally, we are focused on a goal of $4 billion of revenue by the end of our fiscal 2024,” said Irwin Simon, CEO of Tilray. “The investment we are announcing in MedMen securities today is a critical step towards delivering on our objective as we work to enable Tilray to lead the U.S. market when legalization allows.”—Danny Sullivan

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