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MedMen closes $60m debut fund

The cannabis-focused investor has closed it first vehicle early after an IPO from an investment produced profits sooner than expected.

Los Angeles-based MedMen Capital has raised $60 million for a vehicle focused on North America’s legal cannabis industry.

MedMen representative Daniel Yi told Agri Investor that investors in the MedMen Opportunity Fund were mostly family offices and high net worth individuals.

He said that while the vehicle had an initial target of $100 million when it launched last summer, the firm began winding the fund down in mid-April at $60 million in anticipation of a liquidity event.

The firm decided against raising more capital in order to maximize distributions for existing investors from the initial public offering for MedReleaf, a Canadian cannabis cultivator and distributor in which MedMen had purchased 10 million shares for about $10 million, according to Yi. MedRelief closed its IPO on the Toronto Stock Exchange on June 7th at $9.50 per share.

Yi said that the MedMen Opportunity Fund will target annual returns of 30 percent through investments in cultivation and extraction assets, dispensaries and other related investments.

So far, the fund has deployed $92.3 million, including leverage, into seven projects, Yi said. The firm operates a dispensary in West Hollywood California, facilities in New York and has started construction on a 45,000 square foot cultivation facility in Nevada.

The cannabis investment environment is evolving quickly, according to Yi. “We are at that inflection point in this industry where there’s still a lot of undervalued assets because, the big institutional investors are not going to enter this space quite yet,” he said.

Former BlackRock managing director Chris Leavy, who joined MedMen as co-chairman and partner in April, told Agri Investor that it was the opportunity to build on his experience with undervalued assets in inefficient markets that enticed him out of retirement to join the firm.

“The cannabis market is so inefficient and there are so few buyers that you can barely call it an asset class,” he said. “As a result, the values are tremendous.”