MedMen is being sued by former employees for almost $1 million

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

A cannabis class action lawsuit filed two and a half a years ago by a former MedMen employee has almost come to a head. 

The suit, which will proceed to a hearing on March 1, could result in the plaintiffs receiving a $975,000 settlement. Well, that is if a California judge agrees to the proposed resolution.

Approximately 1,300 plaintiffs are involved in the cannabis class action suit filed against MedMen. Should the settlement be agreed upon, each participating class member would receive around $414 in compensation.

What does MedMen’s cannabis class action lawsuit allege?

MedMen, which trades on the Canadian Securities Exchange under the ticker ‘MMEN’ and on the U.S. over-the-counter markets under the ticker ‘MMNFF’, has fallen under fire for a number of non-fulfilments.

Details of the suit are listed below:

  • Failure to sufficiently compensate employees for their clocked and unclocked hours;
  • Failure to provide employees with mandatory food or rest breaks;
  • Failure to accurately record hours worked by employees;

Anthony Torres and Chelsea Medlock are the lead plaintiffs of MedMen’s cannabis class action lawsuit. It was filed in November 2018.

In 2019, a mediator helped the plaintiffs to reach a decision on the settlement amount. A February 2 court filing claims that the Los Angeles County Superior Court is now being urged to approve the entire amount.

The $975,000 settlement amount covers the following fees:

  • $325,000 in attorney fees;
  • $75,000 for settlement of penalties;
  • $15,000 for settlement administration costs;
  • $11,000 for litigation costs.

All of the employees who are hoping to win MedMen’s cannabis class action lawsuit were employed at the company’s California stores from November 2014 to September 2020.

MedMen is suffering a blow to its revenue

In a recently-disclosed SEC filing, MedMen reluctantly admitted that its financials took a hard hit during fiscal Q2. The SEC filing honed in on the company’s inability to submit its 10-Q in a punctual manner. 

For its fiscal Q2, MedMen reported revenue of $33.8 million a 23 percent reduction from one year ago and less than the $38.8 million that analysts previously predicted. Conversely, revenue of $35.6 million was reported in its fiscal Q1. 

Fortunately, operating losses in Q2 are set to recover, with the company predicting that losses will improve from $69.3 million last year to $42.9 million this year. Furthermore, gross margin is on-track to improve to 39.9 percent from 29.1 percent.

The company’s notable financial decline has been attributed to the repercussions that the coronavirus pandemic has had on both retail and tourism industries in California and Nevada. MedMen did, however, report major growth in Florida and Illinois since the same time last year.

Looking ahead, the company has come to terms with the fact that its net income will likely plummet. Specifically, MedMen expects a net loss of $69.6 million more than the $56.7 million recorded a year ago. The cannabis company also cited $38.2 million growth in its provision for income taxes stimulated by 280E.

Details of the company’s February 16 hosting call are yet to be announced.