MedMen, a Los Angeles-based investor focused on the North American cannabis industry, has launched its second fund, according to a regulatory filing dated Monday.
MedMen Opportunity Fund II has raised $17.5 million from four investors, according to the filing, and has a target of $500 million. The vehicle accepts minimum investments of $500,000.
Earlier this month, MedMen closed its debut fund on $60 million, below its original $100 million target. The firm decided against raising more capital to maximise distributions for existing investors from the initial public offering for MedReleaf, a Canadian cannabis cultivator and distributor in which MedMen had invested.
Chris Leavy, a former BlackRock managing director who came out of retirement to join MedMen as co-chairman earlier this year, told Agri Investor that MedMen Opportunity Fund II will target estimated returns of 30 percent through investments in North American cannabis cultivation, processing and retail operations.
“On the one hand: attractive assets. On the other hand: undervalued assets, because there are so many traditional pools of capital that remain on the sidelines. That is exactly what creates the opportunity in the asset class,” he said.
Leavy said that MedMen decided to raise the target on the second fund to $500 million in an attempt to meet growing investor demand for exposure to the burgeoning cannabis industry.
While high-net-worth individuals and family offices remain the dominant investors into MedMen’s funds, Leavy said that interest in the space is broadening to include more traditional institutional investor types, some of which his firm is already holding its second and third meetings with.
“We believe it’s only a matter of time before that institutional interest turns into investment,” Leavy said, estimating that it would be about two years before larger institutions commit capital to cannabis-focused funds. “There’s just too much tire-kicking going on for me to believe otherwise.”