Tilray buys convertible debt of pot producer MedMen, eyes U.S. market

Medmen Enterprises

18/08/2021 24:32

By Shariq Khan
    Aug 17 (Reuters) - Canadian pot producer Tilray Inc
 TLRY.TO  on Tuesday said it will buy convertible debt of
struggling U.S. rival MedMen Enterprises Inc's  MMEN.CD  for
about $166 million in a deal with partners, giving it a pathway
to enter the United States.
    Due to U.S. federal laws classifying marijuana as an illegal
drug, companies not based in the country can not directly own a
U.S. weed business. However, the Biden administration has
promised reform, making Canadian producers hopeful they could
operate in the country soon.
    By buying convertible debt and warrants - which can be
changed into shares later - Tilray gets the option to take a
"significant equity position in MedMen... following U.S.
cannabis legalization", it said in a statement.
    Tilray shares rose 7% to $14.04 in aftermarket trading on
the Nasdaq.
    MedMen, once the largest U.S. cannabis company, put itself
up for sale this year after years of growing losses and a string
of scandals that led to lawsuits from former executives and
investors.
    Despite its "challenges and tribulations", MedMen remains an
"iconic brand, known by everybody, the 'Apple' of cannabis,"
Tilray Chief Executive Irwin Simon said in an interview.
    Simon, who earlier this year reverse merged his former
company Aphria with Tilray, is still looking at more deals to
get the new company to $4 billion in revenue by 2024.
    "I want to grow by building additional share in Canada.
There's a lot we will do in Europe. We're looking to do deals in
the consumer business," Simon said, adding that Tilray could
also do more U.S. deals similar to MedMen.
    Tilray said it purchased about 75% of MedMen's outstanding
convertible notes and 65% of its warrants in partnership with
other strategic investors. Its share will equate to about 21% of
MedMen's outstanding Class B shares, it said.  urn:newsml:reuters.com:*:nFWN2PO0LZ
    MedMen has 25 retail stores in key states including
California, Los Angeles and Las Vegas, and it should be able to
get to 30 stores by the end of the year, Simon said.

 (Reporting by Shariq Khan in Bengaluru; editing by Richard
Pullin)
 ((Shariq.Khan@thomsonreuters.com; Twitter: @shariqrtrs))