Based on $143 million raise, MedMen appears to be the most valuable public U.S. marijuana company to date.

Shares of upscale U.S. marijuana retailer MM Enterprises USA LLC are expected to begin trading on the Canadian Securities Exchange Tuesday, following the reverse takeover of a Canadian shell company and a $143-million raise that gives the company an implied value of more than $2 billion.

MedMen, which will trade as MMEN after acquiring oil and gas shell Ladera Ventures Corp., is by far the largest company listed on the CSE, and is expected to be the most valuable public U.S. marijuana company to date.

“The Canadian Securities Exchange … gives us the fastest access to liquid capital that we can get at this point,” said Daniel Yi, MedMen’s senior vice-president of corporate communications.

“We’re already in three states and we have a lot of projects that are in the pipeline. Our ability to raise capital fast is what will also allow us to grow and build faster,” he said.

The company, which is aiming to cultivate a high-end Apple Store-inspired retail brand, has 12 stores across New York, Nevada and California — including a store that opened on Manhattan’s trendy Fifth Avenue last month — as well as four cultivation facilities either built or under construction.

MedMen employs 800 people, according to Yi, and has raised roughly US$135 million in private equity and venture capital.

The listing comes as U.S. cannabis companies are increasingly looking to Canadian public markets as a way to raise money.

Because cannabis remains illegal on the federal level in the U.S., companies operating south of the border — regardless of whether they are domiciled in the U.S. or Canada — cannot list on mainstream American exchanges, and trade mostly over the counter.

This has made Canada’s alternative exchanges, most notably the CSE, a potentially attractive option for U.S. cannabis companies, even as the larger Toronto Stock Exchange and Venture Exchange don’t permit listings by marijuana companies with U.S. exposure. 

“We’ve got an existing ecosystem of dealers and investors who will support investment in these companies,” said Richard Carleton, chief executive of the CSE, which lists more than 70 companies in the cannabis space, and more than 20 with operations in the U.S.

“The entrepreneurs in the space look at the valuations that companies both with U.S. operations and Canadian operations have, and they think, ‘Alright, it would be nice to get some of their early stage investors some liquidity at the valuations that are present on the Canadian public markets,’” Carleton added.

We've got an existing ecosystem of dealers and investors who will support investment in these companies

- Richard Carleton, CEO of Canadian Securities Exchange

For MedMen, the CSE listing is less about liquidity for early shareholders than the ability to raise cash quickly, said Yi.

“Raising capital through private equity or venture capital … you are essentially raising two or three million at a time, and you’re having a lot of meetings with family offices, wealthy individuals. It’s a much slower pace of raising capital than it would be in a public market,” said Yi.

“(Going public) gives us the opportunity to use our valuation and our stocks to also fund our venture going forward,” Yi added, pointing to such companies as Canopy Growth Corp. and Aurora Cannabis Inc. that have acquired numerous assets using stock rather than cash.

MedMen also intends to enter the Canadian recreational marijuana market “as soon as the Canadian Government will allow us,” said Yi.

In March, the company announced a joint venture, called MedMen Canada Inc., with Canadian licensed producer Cronos Group Inc. The partnership intends to bring MedMen branded stores to the provinces, such as Alberta and British Columbia, where private retail will be allowed.   

“We would operate it day-to-day, because we have the operational expertise on the retail side. Cronos obviously has the infrastructure for the cultivation and production, and the licensing infrastructure for Canada,” said Yi.

Like many companies in the cannabis space, MedMen’s growth has been extraordinarily rapid. Two years ago the company had only one dispensary, in West Hollywood, and one growing facility, in nearby Sun Valley.

The $143 million financing, concurrent with the reverse takeover, was led by Cormark Securities Inc. and Canaccord Genuity Corp.

It saw MedMen shares sell for $5.25, according Vahan Ajamian, a former Beacon Securities Ltd. analyst who joined MedMen last week as the company’s new managing director of analyst relations, implying a pre-listing value of $2.14 billion.