Rise of Big Weed: MedMen’s Growing Pains
Adam Bierman is hosting what he calls a family reunion for about 60 employees at MedMen, the country’s most prominent retail-weed company. The MedMen CEO is the size of a baseball middle infielder, a position he used to play in college. He has the temperament as well: fierce eyes, buzz-cut hair and a brash style that has been a boost and a bust for MedMen. He stands in front of a Culver City, California, conference room with a PowerPoint clicker in his hand and talks like the guy trying to sell you a ShamWow on late-night TV, but with a prosperity-gospel twist. He begins with the pain-relieving potential of marijuana.
“If cannabis can replace pills, then maybe I’ll get a better job,” says Bierman, clapping his hands. Bierman was a suit man just three years ago, but now he’s mirroring his clients in a purple hoodie and sweatpants. “Or maybe there’s a city I’d rather live in. Or maybe there’s a wife or husband I’d rather be with. I don’t know, but live your life!”
Weed is his calling. He raps about how pot is therapeutic and calorie-free. He talks about how marijuana saved his marriage. He talks of a future where MedMen is doing $1 billion in business, wait, make it $1.5 billion, no, $2 billion. Bierman asks who in the room is the most recent hire. A man raises his hand. He is Employee #2,209. Bierman smiles. “Can you imagine how great it would be to be Employee #2,209 at Amazon?”
If you don’t live out west, you may not know MedMen yet, but Bierman and his partner, Andrew Modlin, want to change that. MedMen will soon have 37 wood-paneled Apple-like stores — down to budtenders who can check you out with iPhones — in five states, with prime locations near the Vegas Strip, adjacent to Beverly Hills and on Fifth Avenue in Manhattan. Bierman often makes a comparison between MedMen and Whole Foods, and it’s true. MedMen offers the same kind of clean-aisled, affluent-white-people shopping experience, and like Whole Foods, MedMen’s products are high-end and delicious.
They are not targeting Seth Rogen — rather, the chardonnay moms who haven’t smoked pot since the 2002 Gamma Phi Beta formal got a little weird.
Everything is happening. Spike Jonze just made a two-minute film for MedMen, narrating the weed journey from our Founding Fathers’ hemp farms to minorities being jailed for possession to a couple entering their idyllic home, carrying a red MedMen bag. MedMen is opening pot-processing plants and farms from Nevada to Florida. There’s a new MedMen clothing line. In 2018, the company jumped from 200 employees to 1,200. “It was just like, ‘Hey, let’s rent out the Marriott and have a job fair, and let’s hire 200 people if they show up and they can fog a mirror,’ ” recalls Bierman. “Because we’ve got crazy needs.”
Those crazy needs were met with fresh capital when MedMen went public last year on the Canadian Securities Exchange — cannabis firms are still prevented from trading in the United States. There was a valuation of MedMen at $1 billion, giving the company “unicorn” status in the venture-capital world. Early this year, the company announced it made $29.9 million in revenue in the second quarter, an astounding rise from a year ago.
That was the good news. Less great was that MedMen still lost $65 million in the latest quarter. Then, in January, deposed CFO James Parker sued the company for wrongful dismissal, alleging, among other things, a company spending addiction where MedMen paid for chauffeured Escalades for Bierman and a custom $160,000 Tesla SUV for Modlin. Parker also claimed MedMen chartered jets, built safe rooms for its founders, bought a $300,000 conference table, and spent the same amount to bring Bierman’s marriage counselor on staff as a life coach. (Parker declined comment.) Shortly after the company went public, both the 31-year-old Modlin and 37-year-old Bierman took millions in bonuses from the still-in-the-red company, a legal move but one that did not endear them to potential investors.
Parker also accused Bierman of running a bro-culture company, coming to work high and ignoring cocaine use at a company function. He alleged that management referred to a staffer as a “pussy bitch.” Bierman reputedly called an L.A. councilman a “midget Negro.” Parker claimed that Bierman instructed him to go up to a tardy co-worker’s hotel room and “take his fist out of his boyfriend’s ass and tell him to get to work.”
They are targeting the chardonnay moms who haven’t smoked pot since the 2002 Gamma Phi Beta formal got a little weird.
Bierman and Modlin strenuously contest all of the charges. Bierman calls the claims “complete garbage,” maintaining that Modlin is openly gay and that his wife is Latina, so accusations of bigotry don’t make sense.
Others took the charges seriously. MedMen holds one of 10 precious medical-marijuana licenses in New York. Still, the New York Medical Cannabis Industry Association ejected the company from the organization based on the allegations. None of it helped MedMen’s bottom line, and the stock plummeted from $7.57 to $2.90. (It currently hovers near $3 a share.) This was a bummer for Bierman and Modlin because — in financial parlance — they own a shit-ton of stock.
Back in the conference room, Bierman suggests today’s talk has nothing to do with all the mishigas — he just wants to reconnect with his company that has quintupled in size over the past 14 months. He’s been traveling the country to various MedMen outposts on a self-styled “Why Not?” tour.
It’s equal parts creation story and revivalist tent show. Weed is now a cutthroat capitalist endeavor, but Bierman styles it as one part crusade — MedMen says it donates millions to weed-decriminalization efforts — and one part transformational experience, with billboards around L.A. reading: Welcome to the New Normal — Witness History Now At MedMen.com.
Right now, MedMen is well-positioned in the Golden State, where it claims to control seven percent of retail sales in the largest recreational-pot marketplace in the world. It also has a stronghold in Las Vegas, with a store strategically placed near the airport for the arriving and departing hedonist. The rest of its bets, specifically in Florida, New York and Illinois, are educated risks that could either make or bankrupt MedMen.
Bierman is a fidgety sort, and he bounces around the room talking about 2009, when he and Modlin were running a marketing company and were asked to do some work for a medical-marijuana shop. At the time, Bierman was three months in arrears on rent. He was astounded when he learned the elderly woman running the store was raking in $300,000 a year.
MedMen’s Florida investment is so large that it’s making a big bet: Hold until Florida goes legal in 2021 and look like geniuses, or go broke.
“If the crazy blue-haired lady and her dirty-ass dispensary can make 300 grand, why is it that I can’t pay my rent?” Bierman tells his disciples in Culver City. A year later, Bierman and Modlin opened their first med-pot shop in Marina Del Rey. They started with a monthly budget of $1,200 — they just spent $53 million for a retail license in Florida, a whopping figure even more whopping since the Sunshine State is at least two years away before transitioning from a medical-marijuana state to a recreational one. While MedMen points to the multibillion-dollar market in Florida for just medical use, the real money to be made is in recreation. MedMen’s Florida investment is so large that it’s making a big bet: Hold until Florida goes legal in 2021 — at the earliest — and look like geniuses, or go broke before then and look like non-geniuses.
Bierman talks for more than an hour. At one point, he flips on the screen a photograph of a muscular male dancer. He asks if anyone knows his name. Someone suggests Robert Pattinson. Nope. Bierman gives the room a “you dummies” look.
“That’s Sergei Polunin,” he says. “To me, he’s the ‘why not?’ closest to MedMen and the opportunities we have.”
Bierman tells the story of Polunin, a Ukrainian prodigy who rose to the top of the ballet world and then quit so he could have a life. “He talks about never having a cheeseburger,” says Bierman, his voice going quiet. “He didn’t have any friends or a social life. This is like LeBron three years in the NBA saying, ‘I quit.’ ”
He pauses for a moment and continues: “This is a version of ‘why not?’ I don’t know where I’m gonna be tomorrow. Am I gonna wake up? You have to do what makes you happy. I don’t care what my wife or husband has to say. I need to live my life, because tomorrow the whole thing might be gone.” Seize-the-day rhetoric is an interesting take for a company selling a product renowned for encouraging people to lay around eating leftover Chipotle while watching Saved by the Bell. Still, his audience is spellbound and breaks into applause.
It’s time to go, but I can’t get Sergei Polunin out of my head. I Google him and find the New York Times headline, “Anti-Gay and Sexist Posts Cost Sergei Polunin a Role in Paris.” Turns out Polunin’s career is in the toilet because of a dozen anti-gay Instagram posts. Oh, yeah, he also has a Vladimir Putin tat and has professed love for Donald Trump. Let’s recap. MedMen, reeling from claims of bigotry, is promoting a bigot dancer/authoritarian fanboy as its role model.
No matter. Earlier, Bierman dismisses the skeptics who have suggested MedMen concentrate on just California and simply consolidate its gains until there is profitability. “We’re not playing like that,” he says. “There is no reason we cannot be the biggest marijuana company on the planet. With that platform, we can actually change the world.”
There’s two ways this can go: Bierman and his partner, Modlin, make a billion dollars. Or funding ends with investors frustrated that the duo have created a company that becomes the Pets.com of the weed business.
Smell all the pretty flowers. Well, actually you can’t smell the flower, a.k.a. weed, because it’s behind hermetic plastic domes on shiny wood tables in the Beverly Hills-adjacent 2,500-square-foot MedMen store. I’m getting a tour from Modlin, who is all rusty-haired chill, a contrast to the seriously-not-chill Bierman. “Some things he can look at very aggressively, I can look at very calmly,” Modlin says.
He is wearing a red MedMen letter jacket, the defining item of clothing for the brand. He is eager to share how the MedMen retail experience differs from the old days of 2017.
“You’d go into the dispensary and they have this big jar of weed, and they put it up to your face and then people are coughing into it or sticking their hands in,” says Modlin, wrinkling his nose in disgust. “So we designed these special pods that you could have the flower in them, but they’re tethered down to the table.”
MedMen’s fancy digs spell the death of the pioneer era in California pot that raged for the first decade of medical-marijuana legalization.
A MedMen store does have an Apple-like quality — something MedMen has stressed in fundraising documents — with floor-to-ceiling windows, and roving budtenders willing to answer all your questions. The walls feature giant posters of loafer-wearing men carrying red MedMen shopping bags and living their best life. Next to the pods, there are screens you can click on and learn all about indica and sativa levels. You can learn about terpenes, natural chemical compounds found in cannabis that can help with anxiety, insomnia and, perhaps, insolvency.
Not everyone is sold by the approach. MedMen’s fancy digs spell the death of the pioneer era in California pot that raged for the first decade of medical-marijuana legalization. “When California went recreational, we went overnight from elusive medicine to a commodity,” says Dr. Dina, a longtime advocate with more than 15 years in the L.A. medical-marijuana business who counts Snoop Dogg as a client. (Dr. Dina is not an actual doctor.) While she sells some products to MedMen, she’s not a great fan, particularly its practice of parking trucks with MedMen banners in front of other shops. She likens her favorite pot shops to Cheers, where everyone knows your name. “To me, their approach is like Apple, kind of impersonal,” she says.
Modlin shrugs off the “old guard” criticism. His disarmingly mellow vibe hides a sharp mind. “What’s interesting about me is people think I’m high, like, all the time,” says Modlin. “It’s just the laid-back California attitude.” He eyes two middle-aged, well-dressed moms and smiles. They are the target market.
Some pushers of higher-scale pot products like what they see in the MedMen setup. “Every other retail business, you can shop at Whole Foods or the deli around the corner,” says Chris Folkerts, CEO of Grenco Science, which sells high-end vape pens. “You have that choice. This shouldn’t be any different. People going into MedMen aren’t looking for a deal.”
One day, MedMen hopes to cut out the middlemen vendors. Following in the hallowed footsteps of Costco’s Kirkland brand, MedMen is beginning to offer its own Statemade brand that, along with other in-house brands, it hopes will eventually make up 50 percent of sales. Since each state’s pot business is individually regulated, all products must be grown, bagged and processed in-state. Often, a small mom-and-pop company will produce a well-regarded edible that will quickly sell out but won’t be restocked for weeks, leading to unhappy customers. A MedMen-run Statemade equivalent could end that dilemma, and the company’s Nevada operation gives a clue to its dream of controlling the means of production: MedMen grows flower in its Dutch-style greenhouse, located in Mustang, just outside Reno. The flower is harvested, processed and tested for quality in MedMen’s in-house laboratory, and is also sent out to be checked by a third party. Finished products are then distributed to its Las Vegas stores.
Modlin helps me pick out a Veuve Cliquot of pre-rolled joints. On the way to my car, I spot the two moms. They giggle and rip into a bag of edibles.
Now that pot is being corporatized, it’s hard for Bierman to maintain his posture as weed rebel. (He complains that MedMen’s profits are being hurt by nonlicensed pot stores in L.A. and calls for a crackdown.) He talks in business-speak about sales per retail square feet, but he never loses the chip on his shoulder. He went to high school in San Diego and showed a precocious entrepreneurial side, hosting house parties at 14 and charging 10 bucks a head. He spent much of his twenties making a living playing poker. He knows he can be a bit Type A, but when he comes home, he takes the edge off.
“Cannabis has helped me take it to another level,” says Bierman, who has two hits when he gets home. “It allows me to reset. I’m present, and I’m appreciative of the fact that I have 30 quality minutes with my wife.” Later, he adds more positivity: “My tokes add no calories to my day.”
MedMen skeptics say Bierman is either bluffing or he’s palmed the two aces from the bottom of the deck.
The apparently munchie-free Bierman claims that an early payroll was met with poker winnings, and he likes to talk about MedMen’s future in card-speak. He uses a five-card-stud analogy to answer a question about why he doesn’t slow MedMen’s roll rather than risk expanding into Florida and New York.
“It’s process, man,” says Bierman. “I’m looking at the two cards I have and the three cards out there. If somebody was to say, ‘Great, are you gonna take the money from the middle and walk away?’ ” He smiles. “Nope, I’m sitting with aces in the game of a lifetime. I’m not slowing down.”
MedMen skeptics say Bierman is either bluffing or he’s palmed the two aces from the bottom of the deck. “The company is far out ahead of their skis,” one weed venture capitalist tells me, describing its chances of long-term success as “microscopic.”
Much of the criticism revolves around moves like the 2018 opening of a MedMen store and license on Manhattan’s Fifth Avenue for $26.5 million, not including a sizable lease and the untidy fact that New York is at least a year away from full legalization. Bierman argues that licenses in New York are already exponentially higher than what he paid. He dismisses what he calls oversaturated markets like Colorado and Oregon, where there may be more pot emporiums than dollar stores. This is why MedMen is moving into Florida, with 12 stores scheduled to open by mid-2020. He insists, despite the high overhead, MedMen is located right where it needs to be for national domination. Bierman thinks that prime retail spots — limited by zoning restrictions — are the “defensible” part of the industry.
“The people following us are either going to have to buy us or open up in Arkansas,” says Bierman. “Now you can make money in Arkansas, but that’s not where you build a global brand.”
That kind of attitude has made Bierman few friends in the industry. “What’s bothering people is that they’re getting so much cash and not using it for good,” says Dr. Dina. “They’re just using it to branch out and take over.”
MedMen’s burn rate has been fierce because of Bierman’s expansionist dreams. He and Modlin have quickly moved from opening the first self-branded MedMen in West Hollywood, taking possession of an indoor cultivation facility in L.A., and starting construction on the Nevada facility, all in the past four years. The expenditures were funded by large investments from venture capitalists, starting with $60 million in 2016 and another $75 million in 2017.
At first, Bierman’s approach seemed prescient. When pot went fully legal on January 1st, 2018, MedMen’s stores were some of a few outlets licensed on Day One, with lines circling around the block.
But the company took some shortcuts. According to two former senior employees with direct knowledge of the West Hollywood store, Modlin insisted that they accept credit cards to improve the customer experience, even though credit-card companies forbid it due to marijuana’s federal illegality. To get around it, MedMen billed the charges through other MedMen entities. (For a time, MedMen’s website even said it took credit cards.) “Adam just wouldn’t even talk to me about it,” says a former executive who was at the opening.
MedMen’s credit-card policy began during the California medical-marijuana phase. I obtained a billing statement for December 2017 that shows MedMen processed more than $145,000 in credit cards from the Beverly Hills store that was billed to a BH Fund II Group LLC, an innocuous-sounding subsidiary that received mail at MedMen’s Culver City headquarters. The practice continued with recreational sales, only stopping, by MedMen’s own admission, when the company went public last March.
When pot went fully legal on January 1st, 2018, MedMen’s stores were some of a few outlets licensed on Day One, with lines circling around the block.
There were some other suspect moves. Management tried to keep track of inventory, but often found itself off by large margins. There was an explanation: Inventory was being transferred from store to store and not being checked in properly, despite California requiring a “seed to sale” tracking system.
“I couldn’t figure out what was happening,” says the former executive. “Then an employee would show up in their mom’s Volvo with boxes of product in the trunk. Imagine if he was in an accident or was pulled over and had to explain that to police.” (MedMen denies that it shifted inventory between stores.)
Bierman’s Wild West tactics continued back at the office. The hiring of his therapist was supposed to motivate senior staff to greater heights. (Think the corporate-therapist character in Billions, which, along with The West Wing, happens to be Bierman’s favorite show.) But staffers found Bierman’s guy to be more of a snitch than a motivator. “Adam’s shrink’s job was to ensure high performance,” recalls the former executive. “But in reality it was to see if you believed in Adam’s vision.” MedMen ran through a small army of senior-level employees. Disgruntled staffers saw Bierman as a megalomaniac and nicknamed the MedMen offices as the Palace of Hubris.
Then there are the lawsuits. One of the most potentially damaging accusations that former CFO Parker makes is that Bierman mentioned to him that he was “falsifying his personal brokerage statement” on mortgage applications in the hopes of getting a loan for his first home. Parker’s charge was backed up by another former executive who says he heard Bierman discussing it. (Bierman denies any wrongdoing.)
There are more legal entanglements. Former employees have filed a class-action suit seeking money for unpaid overtime. Some early investors are suing, alleging that Bierman and Modlin enriched themselves out of turn when MedMen’s valuation skyrocketed. Critics call the much-hyped $1 billion valuation more than a little suspect. All of the white noise is making investors nervous. Cannacord, a venture-capital firm with a MedMen stake, unloaded nearly $14 million in stock after the CFO lawsuit.
In February, Bierman spoke before a weed conference in Boston and talked about how he’d never pull any shenanigans to goose MedMen’s stock price.
“Taking those bonuses isn’t illegal, but it sends a message to investors that this is a company where the men in charge may not have the stock as their top priority.”
“We’ve been real and authentic,” said Bierman. “The one thing we’ve never done is manage the stock price because that wouldn’t be authentic.”
A few weeks later, it emerged that MedMen had paid $200,000 to Winning Media, a marketing firm, to boost the company’s image in the weeks before a quarterly earnings call through online ads and placement of positive stories on pot-related websites.
Winning’s hire was publicly announced on January 25th; the company’s stock price rose by 20 percent from January 23rd to January 30th, which may or may not be a coincidence. Winning’s activities were dubious enough that MedMen received an official inquiry from the OTC Market Group, the Canadian Securities Exchange’s policing organization. MedMen severed all dealings with Winning the next day. The activities dovetailed with Parker’s accusation in his lawsuit that Bierman ordered him “to wire hundreds of thousands of dollars to a ‘consultant’ in Canada ‘to buy up our stock when it is under attack.’ ”
Among all the turbulence, it was perhaps not a coincidence that my interview with MedMen board director Jay Brown, the CEO of the entertainment company Roc Nation, was canceled around this time. A week later, Bierman headed to Austin for a SXSW panel on the future of marijuana commerce. He found his appearance being picketed by marijuana activists complaining about MedMen’s lack of diversity in management positions. The other man picketed? Former Republican Speaker of the House and weed opportunist John Boehner.
The marijuana industry is still learning to crawl, much less walk. What happens next with MedMen is unclear. As participants in a business endeavor that is illegal at the nationwide level, federal bankruptcy laws do not protect MedMen. That means creditors, vendors and investors will have a hard time recouping any of their losses.
This may explain why Modlin and Bierman were so enthusiastic to take their bonuses.
“Taking those bonuses isn’t illegal,” says a pot venture capitalist. “But it sends a message to investors that this is a company where the men in charge may not have the stock as their top priority.”
In his defense, Bierman insists early investors were paid back before he and Modlin took their bonuses, and suggests he was urged to take the money by the same people. “The investors don’t want the CEO of a newly public company worried about paying his mortgage,” Bierman says.
What is clear is that MedMen will have to keep raising more money or risk going bust. In March, some insiders suggested that MedMen had only enough cash reserves to last a few more months. Then, on cue, MedMen announced a $100 million investment from Gotham Green Partners, a cannabis-centered investment firm, with another potential $150 million if MedMen hits certain marks. If Bierman and Modlin keep finding angel investors, they may be OK, but insiders say a market correction would hit risky bets like MedMen the hardest.
Bierman refuses to forecast the day when MedMen will turn a profit. But he suggests that the sheer value of the licenses that MedMen holds in various states are worth hundreds of millions of dollars. He remains undaunted, bullish. To him, it’s all about momentum.
“I no longer see this company as a company that has a binary-state-outcome potential of failure or success,” Bierman tells me. “We’re past that.”
On my last visit to MedMen’s offices, I was invited to watch a Red Jacket ceremony, where new employees were given said red jackets after completing three days of training in all aspects of the business. A crowd of MedMen employees lined two sides of the parking lots and gave the newbies high-fives as they ran through the gauntlet like USC football players entering the L.A. Coliseum. There was much whooping and hollering. Everyone seemed ecstatic but probably not high. Afterward, cupcakes were served. Somewhere, Cheech and maybe Chong wept.
Bierman wasn’t there. Still, I remembered something he told me when I expressed some skepticism about his dreams of global domination.
“This is my purpose on this planet,” Bierman said. “We’re going to employ tens of thousands of people. We are going to change the way people look at living their life, and I’m going to build an organization that’s going to outlive me.”
He flashed a grin. “I’m more than good.”
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