Hashish firm Tilray acquires shares in Medmen-Noten

Shares in Canadian cannabis company Tilray rose nearly 5% in expanded trading on Tuesday after it was announced that it was investing in American cannabis retailer Medmen.

As part of the transaction, Tilray and other investors acquired 75% of Medmen’s outstanding convertible bonds from Gotham Green Partners and 65% of the outstanding warrants for $ 165.8 million. Upon conversion to shares, Tilray will hold a minority stake in Medmen. Conversion of the interest is subject to regulatory approvals, US legalization, and other factors.

Should cannabis be legalized at the federal level in the US, Tilray’s interest could help it gain a foothold in the US, Tilray said.

“What Medmen is doing for Tilray is giving us a great brand. Ultimately, legalization gives us the potential to have a great company that we can ultimately bring to the rest of the world,” said Irwin Simon, Tilray chairman and CEO, in an interview on CNBC’s “Closing Bell” on Tuesday.

Despite being a recognized brand, Medmen has struggled with losses in recent years, and its market value has shrunk to less than $ 200 million. The company operates 25 retail stores and plans to open more than five more this year.

Correction: An earlier version of this story stated that the deal gave Tilray a controlling interest in Medmen. The investment actually allows Tilray to purchase a majority stake in Gotham Green Partners’ convertible bonds, which, upon conversion, would constitute a minority stake in Medmen.