MedMen, a Los Angeles-based multistate marijuana operator, announced it is laying off more than 190 employees to shore up its bottom line, joining a growing list of cannabis companies shedding workers amid falling MJ stock prices and a dearth of outside funding.
The cash-strapped, vertically integrated company also disclosed plans to scale back its store openings next year and delay investments in certain markets, including New York and Arizona.
MedMen also is exploring the sale of “certain operations and licenses in states that are currently deemed not critical to the company’s retail footprint.”
In a news release Friday, MedMen said the layoffs include more than 80 corporate-level staffers, amounting to more than 20% of its corporate workforce.
As of Oct. 28, MedMen had more the 1,300 employees, with half of those in retail. The company expects to save approximately $10 million through the head-count reduction, and it signaled that more job cuts are likely on the horizon.
“We find ourselves in the exact same spot as all of the other competitors across the industry, where nobody’s fully funded because everybody’s been living in this high-growth phase,” Adam Bierman, MedMen co-founder and chief executive officer, told Bloomberg. “That’s why we’re taking such dramatic measures.”
As part of its plans to slash costs, the company said it will:
- Sell off its interest in the cannabis-focused Treehouse REIT for total net proceeds of $14 million.
- Back out of “minority” investments in “high-growth brands,” netting the company $8 million.
- Limit new store openings in 2020 to those with revenue potential of more than $10 million within the first year of being operational.
- Divest licenses in “noncore markets.” MedMen said it has hired Canaccord Genuity Corp. to “explore strategic alternatives” for those operations and licenses.
- Continue to focus its business efforts on Chicago, Las Vegas, Los Angeles, Miami and New York City.
The announcement follows last month’s disclosure by MedMen it was terminating its blockbuster acquisition of PharmaCann.
“We have a clear plan to increase our market share, while at the same time enhancing our margins and reducing our corporate overhead,” Bierman said in the news release.
MedMen’s announcement Friday also indicated the company plans to take additional cost-cutting steps.
“It seems there will be more layoffs, and a new share-based incentive bonus plan may mean reduced base pay for remaining employees,” said Mike Regan, equity analyst at Marijuana Business Daily‘s Investor Intelligence.
“Of the $85 million in planned corporate expense savings, the specified cuts add only up to $32 million, so the source of $53 million in savings remains to be seen.”
The news release noted that the company “will continue to eliminate layers within the organization” to create greater efficiency, and that certain functions that previously existed across multiple states will be “consolidated into a centralized function.”
Bart Schaneman can be reached at [email protected]