Chicago-based PharmaCann, LLC and MedMen Enterprises Inc. have entered into a definitive business combination agreement, the companies recently announced. According to this agreement, PharmaCann and MedMen will allegedly merge and combine their respective businesses.
Under this transaction, a newly formed holding firm would seemingly obtain all of PharmaCann’s securities in exchange for New MedMen’s subordinate voting shares, along with all of MedMen’s Class B subordinate voting shares in exchange for New Class B Shares on a 1 for 1 basis. Additionally, all of MedMen’s Class A super voting shares would be obtained by the New MedMen in exchange of New MedMen’s super voting shares on a 1 for 1 basis.
As per the agreement terms, New MedMen’s New Class B Shares would be issued to PharmaCann securityholders such that the former PharmaCann securityholders would hold about 25% of New MedMen’s fully-diluted equity, after the issuance, and majority of such shares would be subjected to lock up period of 6-12 months from completion of this transaction.
Reports further reveal that after completion of this transaction, current holders of MedMen’s Class B subordinate voting shares would hold that number of New Class B Shares, equal to number of MedMen’s Class B subordinate voting shares held immediately prior. Terms for the New Class B Shares would be economically and substantively identical to current MedMen Class B Shares.
Apparently, this transaction is designed for including an exchange of a new holding company and current MedMen shares for facilitating PharmaCann’s tax efficient acquisition under the U.S. tax laws. Following the closing, MedMen shareholders holding share certificates would need to deliver the certificates for exchange. Rest of MedMen shareholders would receive the shares of New MedMen without any action required.
The resulting pro-forma company, which includes pending acquisitions by MedMen, is expected to have portfolio of cannabis licenses throughout the U.S. which would permit the combined company for operating 16 cultivation and production facilities and 76 retail stores. MedMen is expected to add licenses in Virginia, Pennsylvania, Michigan, Ohio, Massachusetts, Maryland, New York and Illinois, through the transaction.