MedMen Enterprises Inc (CNSX:MMEN) (OTCMKTS:MMNFF) (FRA:0JS) fired a very significant salvo today in the race for U.S. cannabis supremacy. While seemingly unintentional, the maneuver effectively places other major U.S. operators on notice that standing still in this nascent industry is not an option.

The catalyzing news came via early morning press release issued by MedMen Enterprises this morning. This very material news announcement the competition like a sledgehammer: MedMen intends to acquire PharmaCann LLC in all-stock transaction valued at US$682 million, making it the largest acquisition transaction in U.S. cannabis history. Furthermore, the acquisition would give the company among the largest U.S. market territories and best-in-class national footprint, with retail presence in 12 states along with 800,000 square feet of production capacity. Combined, the two companies will be licensed for 66 retail stores and 13 cultivation and production facilities.

Yes, the gauntlet has been dropped, even if the company itself doesn’t necessarily view it that way.

I spoke with MedMen SVP of corporate communications, Daniel Yi, to get a better sense on how the company views the acquisition. While extolling the virtues PharmaCann brings into the mix, he insisted it wasn’t about one-upping the competition or acting irrationally for the sake of being the “biggest” U.S. operator. The acquisition simply fits into the corporation’s grand scheme, by providing expansive retail coverage and cultivation capacity in key jurisdictions MedMen wasn’t operating in previously. That includes a presence in Massachusetts, Maryland, Michigan, Virginia and Pennsylvania—all to be added to the roster.

Vahan Ajamian, MD of Analyst Relations for US cannabis giant MedMen, discusses new listing on the Canadian Stock Exchange

Once the acquisition is consummated, MedMen will operate in 12 states, comprising $40 billion of the estimated addressable U.S. marketplace of $75 billion (2030), according to Cowen Group. Without getting into specific projections, MedMen believes the PharmaCann deal gives it enough operating presence to generate $1 billion in annualized revenues once combined assets are integrated and firing on all cylinders.

It’s important to keep in mind the context in which this acquisition is occurring. Since MedMen went public May 29th, it’s raised almost double the amount of capital as the previous two years combined as a private company. With the breakneck speed at which the industry is transforming, MenMen believes the time to act with a strategically-placed partner is now. Thus, they have used shareholder capital—priced near the upper quadrant of the stock’s historical range—to do so.

The market’s reaction to MedMen’s common shares, thus far, is quite favorable. MMEN is currently trading higher by $0.32 to $5.83/share (↑5.81%). The stock has appreciated ↑17.30% over the past eight sessions, bucking broad cannabis sector and risk asset weakness. Along with recent expansionary forays into Arizona, Illinois and San Francisco, the company has benefited from tailwinds generated from a positive news cycle. Today’s optics of becoming a preeminent, broad-reaching U.S. cannabis operators has done nothing to diminish that reality, as incidental as it may be.

Midas Letter will have further coverage of MedMen’s voracious expansion into the U.S. cannabis market as further events warrant.