MedMen was once celebrated as the 'Apple Store of Weed and reached a $2 billion valuation. By April 2024, MedMen had filed for bankruptcy.
As California's cannabis market expanded after legalization, several leading companies seemed poised for dominance. However, due to mismanagement, regulatory pressures and market saturation, many of these giants have collapsed. Here's a closer look at the industry's most notable failures.
MedMen: From Unicorn To Bankruptcy
MedMen, once celebrated as the “Apple Store of Weed,” reached a $2 billion valuation. However, rapid expansion, failed acquisitions, and leadership turnover created financial turmoil. By April 2024, MedMen had filed for bankruptcy with $411 million in liabilities.
Eaze: The Uber Of Weed Falls
Eaze, once California's largest cannabis delivery service, defaulted on a $36.9 million loan and was later acquired by billionaire James Henry Clark. Despite the change in ownership, Eaze could not recover from high operating costs, regulatory burdens and competition from unlicensed operators.
The company will shut down by December 2024, leaving 500 employees without jobs. This failure underscores the harsh market conditions many cannabis businesses face.
FlowKana: Bye Bye To The Sustainable Dream
FlowKana was a pioneer in promoting sustainability and small farmers, but it struggled with California’s regulatory environment and a market flooded with excess supply. Despite raising $175 million and becoming California's top-selling flower brand in 2018, the company couldn't survive the dramatic drop in wholesale cannabis prices.
FlowKana paid as low as $350 per pound for lower-grade flowers in 2019, far below sustainable levels. The company ceased operations in 2023, reflecting the challenges of balancing sustainability with profitability in a turbulent market.
Herbl: The Supply Chain Giant Stumbles
Herbl, once a major force in California's cannabis distribution network, handled approximately $700 million in annual sales and worked with over 1,000 licensed retailers. However, the company's collapse in 2024 was marked by severe liquidity problems and an inability to keep up with mounting unpaid invoices.
Facing a canceled line of credit from its primary lender, East West Bank, Herbl’s financial health rapidly deteriorated, leading to millions of dollars owed to cannabis brands and the state in unpaid taxes.
The company laid off the majority of its workforce, leaving only a small team to manage collections from retailers, many of whom were also struggling to pay what they owed. Herbl's receivership underscores the fragility of California's cannabis infrastructure, where even the largest and seemingly best-established players cannot escape the pressures of overregulation, high taxes and an unpredictable market
A Wake-Up Call
These high-profile failures reveal the volatility of California's cannabis market. Overregulation, high taxes and competition from illicit operators have strained even the biggest companies. The collapse of MedMen, Eaze, FlowKana and Herbl has left thousands of people jobless, and the cannabis sector grapples with the need for reform to prevent further losses.
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