MedMen Enterprises Stock

MedMen Enterprises Inc. (MedMen) operates as a cannabis retailer based in the U.S. with locations in Los Angeles, Las Vegas, Boston, Scottsdale, New York and Chicago.

The company operates through its wholly-owned subsidiaries, MM CAN USA, Inc., a California corporation (‘MM CAN’ or ‘MedMen Corp.’), and MM Enterprises USA, LLC, a Delaware limited liability company (‘MM Enterprises USA’ or the ‘LLC’). MM Enterprises USA has 41 wholly-owned (either directly or indirectly) material subsidiaries.

MedMen offers a robust selection of high-quality products, including MedMen-owned brands, LuxLyte, and MedMen Red through its premium retail stores, proprietary delivery service, as well as curbside and in-store pick up.

As of June 25, 2022, the company operated 30 store locations across California (13), Florida (7), New York (4) Nevada (3), Illinois (1), Massachusetts (1) and Arizona (1). The company’s retail stores are located in strategic locations across key cities and neighborhoods in each of its markets.

The company launched statewide, same-day delivery in California in August 2019 and launched delivery in Nevada in September 2019.

The company launched MedMen Buds, the company’s loyalty program in July 2019. The program is offered in all of the company’s stores in Arizona, Nevada and California; and has more than 800,000 members.

MedMen operated five cultivation and production facilities across Nevada, California, New York, Florida and Arizona. During the fiscal second quarter of 2022, the company effectuated four contractual agreements with American Family of Brands, LLC (AFB), an unrelated third party and no longer has a controlling financial interest in previously consolidated entities, Manlin DHS Development, LLC (DHS) and Project Mustang Development, LLC (Mustang), its cultivation facilities in California and Nevada, respectively, therefore these entities are no longer included in the company’s financial statements.

The company views Nevada, California, Illinois, Arizona and Massachusetts as providing ongoing opportunities for growth due to their market depth, current favorable supply-demand dynamics and regulatory framework.

In addition to owning its own cannabis licenses and operations, the company provides management services to third-party cannabis license-holders. The company has management services contracts at two licensed retail dispensaries in California.

Retail Operations

MedMen operates its retail operations through a number of wholly-owned subsidiaries in California, Nevada, Florida, Arizona, Massachusetts, New York, and Illinois. MedMen operates 13 retail stores in California, one retail store in Arizona, three retail stores in Nevada, and one retail store in Illinois, all of which serve both recreational and medical marijuana patients, one retail store in Massachusetts, which serves recreational customers, and four retail stores in New York. Seven retail stores in Florida that served medical marijuana patients during 2022. Of the company’s 13 retail stores in California, the company owns and operates 11 retail stores and manages the operations of two through long-term management services agreements.

In connection with management’s decision to market and sell the company’s assets in New York and Florida, four and seven of its retail locations, respectively, are classified as held for sale in the Consolidated Financial Statements.

Expanding upon its omni-channel experience, the company launched its delivery platform in California in August 2019 and in September 2019, MedMen’s delivery service was launched in Nevada. At this time, the company expects to expand its delivery service in California and in other states where permissible by the regulatory framework. Delivery service is available seven days a week, 365 days a year. Both MedMen Buds and MedMen Delivery cement the company’s commitment to continuously evolving the consumer experience. During 2021, the company no longer delivers in Nevada and expects to bring back this service at a later date.

Branding and Marketing

MedMen utilizes consistent branding and messaging across its dispensaries under the ‘MedMen’ name. In order to support its retail operations, MedMen has a dedicated marketing team that engages potential customers through in-store demos, social media and promotions, including the MedMen Buds loyalty program.

The company curates unique cannabis products and resources that reflect the interests of its customers.

MedMen works diligently to identify emerging cannabis trends and influencers within beauty, wellness, fashion, sports, and entertainment lifestyle verticals. As cannabis gains popularity across these categories, MedMen aims to become a leading lifestyle destination for the next-generation cannabis consumer.

In order to continue enhancing its customer experience, the company launched MedMen Buds, a rewards program that encompasses over 800,000 individual participants that continues to grow daily, with members across California, Florida, Arizona and Nevada.

Banking and Processing

MedMen deposits funds from its dispensary operations into its banking partners in each respective market. The banks are fully aware of the nature of MedMen’s business and continue to remain supportive of MedMen’s growth plans. MedMen’s dispensaries accept only cash and debit card and do not process credit card payments.

Product Selection and Offerings

Product selection decisions are made by MedMen’s team of buyers, which negotiates and receives bids from potential brand vendors across all product categories, including flower, vape pens, oils, extracts, edibles and pre-rolls. MedMen bases its product selection decisions on product quality, margin potential, consumer feedback and the ability for the respective brands to scale.

MedMen sells its own branded products in California, Arizona, Nevada, and New York under MedMen Red and LuxLyte brands. MedMen manufactures its own products in Arizona, New York and Florida; and expects to leverage contract manufacturers in California, Nevada and Illinois for its own branded products.

MedMen’s retail locations make available a variety of MedMen and third party (resale) cannabis and cannabis products. Cannabis and cannabis products for sale include but are not limited to cannabis dry flower, concentrated cannabis oil, vaporizer forms of cannabis, cannabis edible products and other cannabis products.

In-Store Pickup and Delivery

MedMen offers in-store pickup in most retail locations, accessible from MedMen’s website. Measures to enhance this offering and expand its availability into certain of the company’s other operating states, where permitted under applicable laws and regulations, are underway.

The company launched statewide delivery in California in August 2019.

Loyalty Program

MedMen launched its loyalty program, MedMen Buds, in July 2019. In addition to providing exclusive access to sales and discounts, members of MedMen Buds earn points for every purchase that lead to rewards. MedMen Buds is live in all of the company’s stores across California, Nevada, Florida and Arizona and counts over 800,000 members.

Inventory Management

MedMen has comprehensive inventory management procedures, which are compliant with applicable state and local laws, regulations, ordinances, and other requirements. These procedures ensure strict control over MedMen’s cannabis and cannabis product inventory from delivery by a licensed distributor to sale or delivery to a consumer, or disposal as cannabis waste. Such inventory management procedures also include measures to prevent contamination and maintain the safety and quality of the products dispensed at MedMen’s retail locations. MedMen understands its responsibility to the greater community and the environment and is committed to providing consumers with a consistent and high-quality supply of cannabis.

Managed Dispensaries

MedMen uses the same proprietary, best-practices policies and procedures in both owned and managed dispensaries in order to ensure systematic operations and consistent customer experience. By design, a customer or employee should notice no distinct differences between owned and managed stores. Additionally, MedMen enters into long-term management services agreements.

Cultivation and Production Operations

MedMen’s cultivation and production operations are as follows:

Nevada (Mustang)

Under the Management Agreement with AFB, MedMen’s is the sole customer and purchaser of cannabis and cannabis extracts from this cultivation and production facility in northern Nevada. Prior to the Management Agreement with AFB, MedMen operated this facility. The combined facility is comprised a 30,000 square foot cultivation facility and a 15,000 square foot production facility and sits on a total of 4.27 acres of land. The 30,000 square foot high-tech Dutch hybrid greenhouse allows for 22,000 square feet of canopy space. The production facility includes production and extraction equipment.

California (Desert Hot Springs)

Under the Management Agreement with AFB, MedMen’s is the sole customer and purchaser of cannabis and cannabis extracts from this cultivation and production facility in Desert Hot Springs, California. The combined facility is comprised a 30,000 square foot cultivation facility and a 15,000 square foot production facility and its design is based on the Mustang facility.

Arizona (Mesa)

The company operates a 20,000 square foot cultivation and production facility in Mesa, Arizona.

New York (Utica)

MedMen operates a 25,641 square foot cultivation and production facility in Utica, New York in order to service medical marijuana patients in the state through its master license, which allows for cultivation, production and retail sales.

Florida (Eustis)

Until its sale, MedMen operated a 48,358 square foot cultivation and production facility in Eustis, Florida, which is approximately an hour’s drive north from Orlando.

In New York and Florida, the cultivation and production facilities are focused primarily on the commercialization of cannabis (both medical and recreational, as permitted under applicable laws) and, in select locations, the research and development of new strains of cannabis and cultivation techniques. The procedures at each facility place an emphasis on customer and patient safety, with a strict quality control process. As of June 25, 2022, the company held for sale its retail and cultivation/manufacturing operations in New York and Florida. In February 2021, the company entered into an investment agreement with respect to its New York operations whereby a controlling interest will be acquired by a third party. Accordingly, the operations within the state of New York have been classified as discontinued operations but the company will continue to advise on the New York operations. On February 28, 2022, the company entered into an agreement to sell MME Florida, LLC, including license, dispensaries, inventory and cultivation operations, and thus classified all assets and liabilities and profit or loss allocable to its operations in the state of Florida as discontinued operations.

Management Agreement with AFB: MedMen operated five cultivation and production facilities across Nevada, California, New York, Florida and Arizona. During the fiscal second quarter of fiscal 2022, the company effectuated four contractual agreements with American Family of Brands, LLC (AFB), an unrelated third party and no longer has a controlling financial interest in previously consolidated entities, Manlin DHS Development, LLC (DHS) and Project Mustang Development, LLC (Mustang), its cultivation facilities in California and Nevada, respectively, therefore these entities are no longer included in the company’s financial statements.

Management Services

In addition to owning its own retail licenses, MedMen has signed long-term management services contracts with third-party license owners seeking MedMen’s management services. Management services include the use of the ‘MedMen’ brand, retail operations support, human resources, finance and accounting, marketing, sales, legal and compliance. MedMen has two management services agreements in place with license owners in California. The two managed dispensaries are located in Venice Beach (Abbot Kinney) and the Los Angeles Airport area.

Intellectual Property

As of June 25, 2022, MedMen had 13 registered federal trademarks with the United States Patent and Trademark Office, two registered trademarks in Canada, two trademark applications in Israel, six registered trademarks in Mexico, one registered trademark in California, 17 registered trademarks in Nevada, five registered trademarks in Florida and three registered trademarks in New York. All U.S. federal registered trademarks are further described below.

Trademarks

As of June 25, 2022, MedMen has registered the following 13 federal trademarks in the United States, including the ‘MedMen’ name itself, related logos, and design marks distinctive to MedMen’s brand:

‘MEDMEN’ was registered under registration number 4916626 on March 15, 2016, registration numbers 5301055, 5301056, 5301058, and 5301059 on October 3, 2017 and registration number 5612033 on November 20, 2018. This mark was registered for use in association with providing a range of services, including ‘arranging of seminars; conducting workshops and seminars in the fields of business management, entrepreneurship, and investing’, ‘private equity fund investment services; management of private equity funds; providing venture capital, development capital, private equity and investment funding’, ‘business advice and information; business consultation; business consultation services’, ‘on-line journals, namely, blogs featuring social and medical benefits of cannabis’ and for use in association with the following products: ‘hoodies; jackets; shirts; sweatshirts; long-sleeved shirts; t-shirts’; and ‘plastic water bottles sold empty’.

‘MYMEDMEN’ was registered under registration number 5301054 on October 3, 2017 for use in association with ‘computer software that provides real-time, integrated business management intelligence by combining information from various databases and presenting it in an easy-to-understand user interface’.

The stylized red text logo for ‘MedMen’, as registered under registration number 4788802 on August 11, 2015 for use in association with ‘business consultancy; business consultation services’.

The stylized red ‘M’, was registered under registration number 4825297 on October 5, 2015 for use in association with ‘business consultancy; business consultation; business consultation services’.

The stylized geometric marijuana leaf was registered under registration numbers 5333804 and 5333805 on November 14, 2017 and registration number 5421419 on March 13, 2018. This design mark was registered for use in association with products, namely ‘hoodies; long- sleeved shirts; shirts; sweatshirts; t-shirts’ and for use in association with services including ‘private equity fund investment services; management of private equity funds; providing venture capital, development capital, private equity and investment funding’ and ‘business management consultancy services not including services related to supply chain and inventory management’.

The stylized text logo for ‘EMBER’, was registered under registration number 5616303 on November 27, 2018 for use in association with ‘general feature magazine in the field of cannabis, general feature magazines’.

All federal registered trademarks in the United States described above are subject to renewal 10 years from the date of registration.

Regulation

The company is licensed to operate as a Medical and Adult-Use Retailer, Cultivator, Manufacturer and Distributor under applicable California and local jurisdictional law. The company’s licenses permit it to possess, cultivate, manufacture, distribute, dispense and sell medical and adult-use cannabis in the state of California pursuant to the terms of the various licenses issued by the Department of Cannabis Control under the provision of the California State Legislature passed Senate Bill No. 94, known as Medicinal and Adult-Use Cannabis Regulation and Safety Act and California Assembly Bill No. 133.