Tilray (TSX:TLRY, NASDAQ:TLRY), Canada’s largest cannabis producer, is entering the U.S. market through a strategic investment in MedMen Enterprises.
Tilray said in a statement it is joining a group of strategic investors to acquire $165.8 million U.S. worth of outstanding senior secured convertible notes previously held by Gotham Green Partners, a New York-based private equity firm that specializes in cannabis investing.
According to Tilray, it will be able to exercise those convertible notes into equity once the U.S. legalizes cannabis at the federal level. Tilray will then own the equivalent of 21% of MedMen's Class B voting shares.
The deal gives Tilray a relatively affordable entry point into the U.S. cannabis market as the company was sitting on about $358 million U.S. in cash as of its last financial quarter.
MedMen operates 25 cannabis retail locations with another 21 retail licences across six U.S. states. The company was an early mover in the U.S. cannabis space. However, MedMen has recently sold a series of assets, including the bulk of its New York operations, after incurring a heavy debt load that led to a warning about its ability to continue as a going concern.
In a separate announcement, MedMen announced that a group of investors led by Serruya Private Equity bought $100 million U.S. of the company's stock and warrants in a private placement. Gotham Green said it would extend MedMen's debt covenants to 2028 to provide financial flexibility to the retailera.
