Adam Bierman and Andrew Modlin founded MedMen MMNFF in 2010. Since then the company, which started with a single store in California, skyrocketed off the technical graphs, becoming the first mainstream cannabis company in the world to hit every screen in America. The kickstart of corporate cannabis? Maybe... and for that Adam has received a lot of heat, however, it is undeniable that MedMen attracted the attention of new buyers and investors, and contributed to creating "permanence" in time and space for the industry.
Telling the story of MedMen is important to reflect on the evolution of the industry and understand some of the main cleavages within. Albeit the criticism, Adam argues in favor of corporate cannabis as a necessary "evolution" for the industry. Bold, he responded to the questions of Javier Hasse and Elliot Lane during Benzinga’s Cannabis Insider and left a few exclusives on hot topics such as MedMen's conflict with the DOJ, the fall of the PharmaCann deal and the lawsuit against former CFO James Parker, his association with Jay-Z, The Parent Co. GRAMF, and the future to come.
The Rise Of MedMen
“We were the first cannabis unicorn, the first billion-dollar valuation in history in the US, first private equity fund to raise money to deploy into plant-touching businesses, I think we were the first nationally union-friendly cannabis business, raised a lot of money, bought a lot of assets, built a lot of stores, pissed a lot of people off, made a lot of mistakes, learned a lot of lessons, and along the way had that ‘north star’ of making the world a better place through access to legal regulated cannabis. We were doing things for the first time (...) and inevitably means you are pissing people off,” Bierman said, in reference to the beginnings of the company.
He explained how difficult it was for the company to find capital and navigate the financial space, which until then, had been denied to cannabis businesses. Thus, the conversation went with Bierman explaining how they had to build a business and, at the same time, build an industry, create connections with corporate spaces, draw talent, and invest in lobbying DC. “When I told the lawyers to write the fund documents they laughed at me because, page 1 of the subscription document said ‘this is a federally illegal business and these lunatics are gonna invest in these businesses that aren’t even federally allowed to be opened’, but if you want they are raising $100 million”.
Bierman noted that the mainstreaming of cannabis through MedMen’s branding platform opened the door for new money that eventually attracted the attention of “ long-term investors (...). We were the first to go on TV and say “we are a marihuana company and we are proud of it.”
A pioneers story.
Continue reading the article below or watch the full interview on YouTube.
The Construction Of MedMen, The Brand
Bierman went into detail about his participation in the construction of the brand MedMen and how from the beginning they were trying to mainstream corporate cannabis, change the customer experience and build physical permanence, starting for New York City, so people would become familiar with the plant and its benefits.
He noted that he is “proud” and “excited” to talk about MedMen’s branding, “but in a weird way.”
“This story is a very big reason why I am not talking to you as the CEO of MedMen. And why MedMen has gone through a restructuring and repositioning. Before MedMen, there was not an investor, a banker, a news reporter, or anybody else. Nobody believed that there was a permanent place in mainstream society for cannabis.” Bierman said. "If I'm building a company while I’m building an industry, (because if there is no industry there is no business), how do we get people to respect the fact that there is an inevitable opportunity in this industry?"
“We had to open a store on 5th Avenue so people in Buenos Aires would talk about it!. We had to provide the service so that when people flew into LA from Buenos Aires and went to a MedMen store somebody was there to greet them at the front and say ‘welcome to the future. Right? That person at the front costs a lot of money, they are creating an experience, that is an investment in a brand.”
”What is the first step to putting a flag on the ground? (...) It’s MedMen opening a store on 5th Avenue!. It was about building an industry and building permanence. I remember when the Kardashians had a birthday party and I didn’t pay to have it there!. We built such a welcoming environment that famous people were willing to go shop there and put it on their show as a badge. Now people in Buenos Aires are saying ‘marijuana? Is that a mainstream part of pop culture? Oh, ok, maybe that is not as bad as I have been told growing up. And now the world has opened,” added the former CEO of MedMen.
Cannabis Culture and Corporate Cannabis
Although cannabis has become part of mainstream pop culture there are still many members of the industry who disagree with the corporate turn of cannabis. Talking about cannabis culture, some would argue that MedMen started the wave of corporate cannabis in America, but, where does MedMen sit in this culture-and-corporate-cannabis discussion? Well, Bierman considers corporate cannabis as a necessary evolution of the industry and highlighted the importance of political work performed in D.C. by the Marijuana Policy Project that "changed the world", "for a few million dollars."
“It is the evolution of time and generations. The way I think about this is, if it all makes sense. If you look at the beginnings of all of this movement, Marijuana Policy Project saying ‘we should take this seriously, we are gonna have a DC lobby’, you know… shocking the world, and legalizing it in CO for a few million dollars? Do people know that today? Do we know that CO was the first place in the world to legalize weed and MPP did it for a couple-million-dollar budget while nobody was watching and changed the world?.”
Bierman offered his own experience as a witness case to explain the industrial evolution that left him out of the C-Suite at MedMen.
“Andrew and I showed up in 2010, me, bearing witness to the online ‘Poker boom’ that took place a decade earlier, saying ‘holy shit! this is what I just saw in online gaming where something, where there is demand, goes from in-accessible to accessible! For $13000 we opened our first store. We were just the perfect people at the perfect time. Now, let's say we are at a 5-year deadline to the end of prohibition. I am not the right person to be the face or the CEO of a company that is sitting down with the SEC, the DOJ, whoever ‘….we are gonna list on the NYSE, here is our executive suite….’ I am not the right person for that.”
Although Bierman supports corporate cannabis he remains a stoner who is unwilling to deny his love for marijuana. “I didn't have the balls to say this when I was at MedMen. You know ‘oh I'm a cannabis CEO but I don't smoke weed’, that stuff bothers me. Why at a conference for investors do the executives for cannabis companies have to pretend not to be cannabis users? Those aren't the people that should be making decisions about the future of an experience and an interaction with consumers? In my opinion, it doesn't happen in any other space but in cannabis, it still goes on because of the stigma, right?.”
The PharmaCann Story
Building the first nationwide mainstream marijuana company was not easy and the trajectory of Adam as CEO was full of surprises and setbacks. He explained that the fall of the PharmaCann deal was one of three main reasons behind the “downward death spiral of MedMen’s stock.”
“That really is the start of the downward death spiral of MedMen's stock. It certainly was one of the big drivers but if you ask ‘what was the big driver to take a company five years later to be worth two billion dollars?’ it'd say there are three big things. If you look at the charts it's undeniable this is the moment in time when the PharmaCann deal breaks. That's undeniable. There are two big catalysts for it and then there are a million stories. The biggest driver for failing was and it was the department of justice and the attorney general.”
He noted this was the first time a cannabis transaction like that had to go through the antitrust process in the U.S. “Just think about that, it's a federally illegal business but it qualifies to go through this process so what a confusing place for the DOJ to be in.
Regarding the transaction, Bierman noted that it “took too long.” The uncertainty around the deal further complicated the finances of the firm. “We had spent so much money integrating those two companies over the period of a year just to have that rug pulled out from underneath us, and then, the street expecting it,” clarified Bierman. “A great example is when Truelieve TCNNF acquired Harvest HRVOF. When you think about how different it is now. We went and fought this fight in the crosshairs of the attorney general of the United States to have marijuana companies be able to pass the approval process, we were the first people to hire a law firm of that ilk in DC to go work with the DOJ. So what is the difference now? There's a roadmap.”
JH: What are people missing, what do they get wrong about this story and what do they get right? and, again, if you have to do a little bit of a mea culpa…
AB: Well I don't know what people, um… are you talking about my wife?
JH: Investors I mean, generally Wall Street.
“I think this is just a story, this is a situation where a lot of this, in my opinion, was inevitable and within that inevitability, the caricature by the media and society at large. We had to be bold enough to grab a spotlight and shine it on the industry, as a way to go ahead and create permanence, that was gonna have to happen whether it was me or somebody else. I think it's the caricature of that individual you talk about in South Park. That's the lazy easy caricature. I never had social media, I'm a very private person. Now I will have social media, like me, love me, hate me, whatever, I want people to at least to understand and know (...) what's missing in the story because there's so much to learn from a collective industry’s perspective.”
Beyond the degrees of inevitability Bierman recognizes that he was naive and inexperienced when he was the CEO of MedMen. “Let's have some humility to answer your question. So here's what they get right I was young, I was inexperienced, I was bold, I was brash, I had a tremendous ego, I would not take no for an answer, I was naive to a lot of the parts of what I would have to do as the CEO as the company grew, you know out… of my inexperience, out of my lack of education, all of that is true,” Bierman said.
Talent Acquisition: “One Of The Biggest Issues At MedMen”
Although Bierman supports the idea of executives leading top-tier companies, getting executives was an issue back in the day. Nowadays we see people with different capital backgrounds, and he refers to these changes in cannabis management as an “inevitable evolution” that allows people to have “real careers”.
He offered an example of the mismatch between different rationales and economic interest within the industry: “I went and spoke up at this conference and most of the people there were legacy growers. I said ‘if you don't evolve you will die’ and ‘the future of this is corporate because it's too big and worth too much for it to stay in mom and pop hands. You have a chance to evolve with it and create value for yourself. If they had tomatoes they would have thrown them at my head.
That was the first time he talked about recruiting, one of his “biggest issues at MedMen.”
“I couldn't recruit,” he said. “Now you have people going to MJBiz in Vegas with things on their chest and saying ‘I'm a cannabis recruiter. We need those people in our industry to transition to what's next. Because without permanence, creativity, artistry, culture, without a permanent place financially in our society, those things can't exist. (...) For everybody who cares about how good the weed is that they smoke or how clean it is or how tested it is or how accessible it is, then you need to want to see a step up in the corporate game.”
“You wanna see GTI GTBIFGTII hiring those people. Bringing on as you know an assistant to the CEO, as a special advisor to the head of marketing, that's the place, but you know if this is about ‘the legacy growers should be growing weed’ well then we don't have a sustainable industry, because they're uninvestable. Because no big investment bank is going to invest in them when they have an excel spreadsheet with audited financials and say ‘is this an inves…?’, no it's not happening. It's got to be under GTI but there's nothing wrong with that as a stoner there's nothing wrong with that.”
The Parent Co. And Jay-Z
Bierman explained his investment thesis in The Parent Company, his strategy with Coastal Dispensaries in California, and his association with Jay-Z. He executed a proof of concept retail roll-up strategy in California, which took a year, to build a concept called Coastal, and sell it to Parent Company for $56 million. “That was like a 70 percent stock deal or something like that. That's my cash in that deal that now is converted to Parent Co. stock.”
Bierman is convinced there will be “an arbitrage that is inevitable”. He explained: “At the point in time in which you can have listings for U.S. plant-touching cannabis companies, you will have these companies get indexed, get an influx of volume (...) you will have GTI listed on the New York stock exchange. The growth opportunity is almost unlimited once they get to the NYSC. I like the more sizable players because I think they're for the most part all undervalued.”
- The Parent Company, that's Jay-z. Have you met him?
I’ve met him. That's the deal that I put together at MedMen. Jay-z's title at that company is a title we came up with. We put the deal together, we lubricated the deal, and then we have this, you know, unfortunate James Parker lawsuit which you haven't even asked me about yet.
James Parker Lawsuit
Former MedMen's CFO, James Parker, was terminated in 2019, and then he sued the firm for approximately $22 million. According to Bierman, he “could not find great talent,” and “went public with a CFO that had never been a CFO before. He was the only CFO that was willing to do it at the time.”
“I recruited the guy even though he was mediocre because that was the best we could get. (...) As the company grew and as those responsibilities became greater for him as a CFO he couldn't do the job and as opposed to facing the music he walked out in the middle of the day and in California you can walk out and sue people. He tried to extort us,” Bierman said.
“He walks out in the middle of financing, the PharmaCann deal falls apart, the biggest lender in the company now is a predatory lender. He walks out and says ‘hey you need a CFO to sign your financing docs’, ‘I want $ 10 million. It was the last straw for me. I called the bank and said ‘hey look this is the deal with my CFO what do you want to do?’ (the market had tanked from the time we inked the deal), and we agreed to adjust the deal so the investors that invested before the market tanks not related to MedMen weren't underwater on it and we took the sizing down. We printed that deal and we told Parker ‘you know we weren't going to be extorted and then he went ahead and sued me and sued us for constructive discharge. We just got done with the trial at the end of last year and the record now about his lies is cemented in that verdict.”
Lobbying Against Home Growing?
- There was a lot of chat about MedMen lobbying against home growing. Was that true?
Of course. Of course, it's true. Why? because there were states that we were trying to change laws in, where we were contributing the most amount of money, we were the ones waving our hands saying ‘come on everybody we got to back the people that are changing the laws we got to participate to create, you know a permanent future. I'd be across from people in government that make laws that would say we can get behind this but we can't get behind homegrown and to me it was crazy!.
It's like ‘does anybody have a problem, people?’ I don't grow my own tomatoes, I go to the farmer's market or Whole Foods. Why is home growing a problem in our society? I don't grow stuff at home. I never had a problem with it. I think it's great. Plenty of my friends grow their weed at home, bring it to me, and that's what I smoke. It's awesome but you know if it's between people not having legal access and the only way you're going to get certain politicians to support the beginning of the program, is to have no homegrown.
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