Marijuana Moguls: MedMen of California Enter Arizona Cannabis Scene

MedMen founders Adam Bierman and Andrew Modlin
MedMen founders Adam Bierman and Andrew Modlin MedMen
Arizona’s booming medical cannabis market has caught the eye of yet another outside investor, this one from California. This month, Los Angeles cannabis company MedMen acquired Monarch Wellness Center dispensary in Scottsdale as well as its 20,000-square-foot cultivation center in Mesa.

MedMen has focused on markets in California, where it operates eight dispensaries between L.A. and San Diego; Nevada, where it’ll soon open its third dispensary; and New York, where it operates four dispensaries, according to CEO and co-founder Adam Bierman.

“We have a leading presence in those primary markets and we are now ready to expand our reach,” Bierman said in a prepared statement. He added that Arizona’s robust medical marijuana program and proximity to California and Nevada, where their brand is already strong, “makes this a great fit.”

MedMen will also acquire co-manufacturing agreements with Kiva Confections, a California-based “chocolatier” cannabis company; Arizona-based Huxton USA, which sells pre-rolls, bud, and vapes; and Mirth Provisions, which sells cannabis-infused beverages out of Washington.

Monarch has been a mainstay in Scottsdale since opening its doors in 2013 as the city’s first dispensary. Since then, it’s raked in more than $10 million in revenue. MedMen agreed to pay 80 percent of the price for Monarch in stock options and 20 percent in cash.

That price has yet to be disclosed. Chelsea Johnson, former Monarch owner, declined to comment on the details of the deal. Typically, such acquisitions don’t involve a sale of the state dispensary license, which is nontransferable, but rather a negotiated contract deal in which the new company controls the license and nonprofit boards.

“Our anticipation is that markets like Arizona … that have medical marijuana programs will actually legalize adult use, as the political momentum is building in this country,” said Daniel Yi, MedMen’s vice president of corporate communication. “We wanted to be early in Arizona, and Monarch is a great dispensary. They have a great following and they’re in a great location.”

“The Arizona marketplace is strong,” said Demitri Downing, executive director of the Marijuana Industry Trade Association. “That was a smart move for Monarch to cash out at this time.”

MedMen will rebrand the store, bringing its signature, Apple Store-esque vibe to cannabis retail with iPads for browsing and samples for smelling as customers pick their product.

“It’s about creating an environment that is inviting for medical-marijuana patients and consumers,” Yi said. “You walk into a MedMen store and it kinda makes you want to browse.”

In Las Vegas, Yi claimed MedMen has introduced the first multilingual menu in the cannabis industry, something they’re definitely looking at implementing in Arizona.

Part of MedMen’s grand strategy, Yi said, is to give customers a consistent experience no matter what state they’re in. MedMen hopes to develop that brand loyalty with extensive locations across the U.S. so customers can find that familiar flower no matter where they travel.

Arizona has been a hotbed for outside investment. Canadian company MPX Bioceuticals acquired three Health for Life dispensaries and The Holistic Center in Phoenix last year. Massachusetts-based Curaleaf, which operates in 12 states, acquired four Swell dispensaries earlier this year.

Arizona isn’t the only new state MedMen is moving into. The company announced a deal last week to acquire PharmaCann, an Illinois cannabis company that operates 10 dispensaries and three cultivation sites in eight states, for stocks worth 25 percent of MedMen’s valuation, or $682 million.

“This is a transformative acquisition that will create the largest U.S. cannabis company in the world’s largest cannabis market,” Bierman said in a press release last week. “This would not have been possible even two years ago and is a testament to how far both the industry and these two companies have evolved.”

The acquisition will bring MedMen’s total number of licenses to 66 retail licenses and 13 cultivation licenses across 12 states. The combined markets will trade about $40 billion by 2030, according to the financial firm Cowen Group.
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