When MedMen Enterprises agreed to buy Chicago-based PharmaCann last year, the $682 million deal was one of the biggest in the history of the legal marijuana industry. Now, it's one of the biggest to fall apart.
On Tuesday, the companies announced they were abandoning a transaction that already had been delayed by regulatory hurdles, but MedMen is not walking away empty-handed.
It's still getting a piece of PharmaCann's Illinois business -- just in time to prepare for the Jan. 1 start of recreational marijuana sales in the state. In exchange for forgiveness of certain debt, MedMen is getting one of PharmaCann's two growing facilities, a retail store, and a license to open another retail location.
That's a win for MedMen, whose only presence in Illinois is a retail location in Oak Park.
Under the law legalizing recreational marijuana, only existing operators will be allowed to grow weed for recreational customers until late 2020 at the earliest. The law also allows existing operators to apply to open a second storefront.
Last week, PharmaCann's two growing facilities were among the first in Illinois to receive licenses to start growing marijuana for recreational sales.
"Illinois has emerged as the most attractive opportunity for our longer-term, strategic growth plan," MedMen co-founder and CEO Adam Bierman said in a new release. "The addition of those assets ... is a win for MedMen and our shareholders."
MedMen said the all-stock deal to buy PharmaCann no longer was in the best interest of shareholders. PharmaCann said it would continue to expand on its own in Illinois and other states.
"It makes our path clear," said Jeremy Unruh, PharmaCann's director of public and regulatory affairs. "We know the Illinois landscape and can't wait to play in our own backyard here."
As part of the agreement to terminate the deal, MedMen forgave a line of credit it had extended to PharmaCann totaling about $21 million, according to MedMen.