Less than a yr after being ousted from management posts at California-based MedMen Enterprises, former CEO Adam Bierman and ex-President Andrew Modlin have discovered a route again into the authorized marijuana industry – working for a separate cannabis company headquartered in Santa Barbara.
According to a number of industry sources, the MedMen co-founders have been working for a number of months with Coastal Dispensary, which holds retail, supply, distribution and manufacturing licenses in a number of cities round Southern California and the Central Coast.
Coastal is co-owned by Colorado cannabis entrepreneur Josh Ginsberg, who co-founded Denver-based marijuana chain Native Roots. Ginsberg and Bierman reportedly have a longstanding relationship.
Bierman and Modlin’s under-the-radar return has been met with skepticism – and amazement – that the 2 may discover a house within the industry, given their high-profile fall from grace that garnered a feature story in Politico final May.
But some industry officers be aware there’s a motive multistate operator MedMen had such a meteoric rise to fame and fortune, which suggests Bierman and Modlin may deliver worth to Coastal.
Former MedMen staffers concerned
Details surrounding Bierman and Modlin’s roles with Coastal stay sketchy, partially as a result of company executives didn’t reply to a number of Marijuana Business Daily requests for remark.
Bierman and Modlin additionally couldn’t be reached for remark.
But industry sources mentioned the 2 have assembled a workforce of former MedMen workers and introduced them to work for Coastal, partially to facilitate enlargement plans for his or her newfound company house.
“It’s building the retail identity. I think it’s putting together the brand and stuff like that. They’re trying to grow and scale,” mentioned a former Coastal contractor who requested anonymity to converse freely to MJBizDaily. “(Bierman is) definitely helping them scale that out.”
The contractor mentioned Bierman and Modlin have been working with Coastal for not less than six months.
And whereas Coastal’s web site says the company has 12 retail areas, the contractor mentioned solely a few of these are operational.
Coastal presently holds 4 lively retail permits, together with two for storefronts in Lompoc and Santa Barbara, and two others for supply, in accordance to information from the California Bureau of Cannabis Control.
Another Southern California marijuana industry businessman, who requested anonymity to converse candidly, mentioned he realized from a Coastal worker that Bierman is a longtime investor within the company and has been appointed to Coastal’s board of administrators.
He described Bierman and Modlin as “strategic partners” for Coastal.
“My understanding is that Adam (Bierman) specifically has been an investor into Coastal for a long time, like over the last couple years, and has a close relationship with … Josh (Ginsberg),” the businessman mentioned. “They have a very close relationship.”
Los Angeles-based guide Avis Bulbulyan, the CEO of California cannabis consultancy Siva Enterprises, mentioned he heard a few weeks in the past from shoppers within the MJ retail area that Bierman pitched them instantly on behalf of Coastal in an try to increase capital.
“Apparently (Bierman has) been going around to retailers and investors and pitching a retail-management concept, sort of along the lines of MedMen 2.0,” Bulbulyan mentioned.
“From what I understand, (Bierman is) on the board of Coastal, and they’re using Coastal as a launching pad, and they’re pitching other dispensary license holders to go in under the umbrella, with a retail brand-management concept, no different from what MedMen was.”
When Bierman and Modlin received their begin within the marijuana industry, they have been ready to broaden shortly by way of using administration agreements to run shops owned by different cannabis entrepreneurs.
In quick, the 2 have been employed operations officers operating the day-to-day enterprise at storefronts. But they weren’t primarily license holders or dispensary homeowners themselves in MedMen’s early years.
That enterprise mannequin appears to be a part of their present playbook for Coastal in some trend: Remake marijuana shops owned by others in order that they’re sleeker and extra engaging to shoppers.
Jerred Kiloh, the president of the Los Angeles-based United Cannabis Business Association (UCBA), mentioned he’d heard months in the past that Bierman and Modlin had made a return to the industry, however he solely not too long ago came upon extra particulars as a result of Coastal utilized for membership to the UCBA.
“I have personally only heard that they are trying to raise money and package their retail assets together, which is maybe more like the model they had started with, when MedMen was first coming out of L.A.,” Kiloh mentioned.
It’s unclear whether or not Bierman and Modlin had any kind of noncompete settlement with MedMen once they departed the company final yr.
Spokespeople at MedMen didn’t reply to an MJBizDaily request for remark.
Ginsberg, who’s listed on the state Bureau of Cannabis Control’s database as considered one of 5 co-owners of Coastal, referred MJBizDaily to a Coastal worker who didn’t reply to a request for remark.
The silence surrounding the return of each Bierman and Modlin is noteworthy, given how media-friendly Bierman was whereas on the helm of MedMen, a company that had a spectacular rise and was as soon as hailed because the “Apple Store of Weed.”
But after MedMen went public in 2018 with a $1.6 billion valuation, its inventory worth nosedived in 2019 and the company – with Bierman and Modlin on the middle – laid off lots of of workers and unloaded “noncore assets.” The company’s inventory additionally suffered.
MedMen – in addition to Bierman and Modlin – have been additionally beset with lawsuits, immense monetary losses, excessive turnover on the govt stage and allegations of monetary improprieties.
“MedMen effectively went bankrupt when its lenders took over, equitized unpayable debts and provided additional capital at enormous dilution to existing shareholders,” Mike Regan, founder and analyst at MJResearchCo, mentioned when requested concerning the management of Bierman and Modlin at MedMen.
Regan famous that a specific purple flag was when MedMen began making an attempt to pay distributors with fairness within the company, including, “Retailers typically implode when vendors cut off supply on liquidity concerns.”
As of March 2, MedMen’s inventory (MMNFF) was buying and selling at roughly 40 cents per share on the U.S. over-the-counter markets.
MedMen nonetheless struggling
MedMen remains to be recovering from the missteps of Bierman and Modlin and has been making an attempt to settle with collectors for a lot of the previous yr.
The company’s newest transfer was to dump its New York operation for $63 million to Ascend Wellness in a battle for survival.
MedMen’s company debt load, as an example, was nonetheless roughly 3½ occasions the company’s annual revenues as of December.
Some of the lawsuits filed towards MedMen whereas Bierman and Modlin have been on the helm stay unresolved, together with one through which former Chief Financial Officer James Parker alleged he was compelled from his place amid a poisonous work environment created by the 2.
A MedMen spokesperson referred to as that lawsuit “baseless claims” when it was filed.
After Bierman and Modlin stepped down from their MedMen management posts in January 2020, each retained seats on the company board of administrators till June, at which level they exited fully.
Their skilled futures within the industry have been a query mark, and their return has been met with a mixture of skepticism and wait-and-see.
“Everyone loves a comeback, but then there are those rare times when the market is happy to see someone fail,” mentioned industry veteran Rob Hunt, a principal at Linnaea Holdings, a California-based personal fairness agency.
“I have no idea why Coastal would put their reputation on the line by associating with those who are viewed in such a controversial way.”
Hunt reckons Coastal’s wager on Bierman and Modlin may come again to chunk the company.
“Anytime a business accepts capital, it has to think of the consequence of having that party attached to its business or on its cap table,” Hunt mentioned.
“In some cases, it may be best to refuse the money if capital comes with more baggage than value. This very well could be one of those times.”
Bulbulyan agreed, saying that, though Bierman and Modlin would possibly deliver vital enterprise acumen and worth to the desk, in addition they carry baggage.
“They really were bad for the industry,” Bulbulyan mentioned. “They left the industry with a black eye. They really hurt a lot of investors, and a lot of people in general, from their workers to” monetary backers.
Can they transfer previous MedMen?
Bulbulyan questioned the knowledge in Coastal partnering with Bierman and Modlin and famous there might be skilled conflicts with MedMen that is likely to be unresolved for the pair.
“The MedMen fallout hasn’t really concluded yet,” Bulbulyan mentioned. “They’re nonetheless dealing with litigation. They’re nonetheless liquidating. They’re nonetheless making an attempt to restructure their company. They’re nonetheless making an attempt to get traders paid again on their unhealthy funding.
“So, when you take all that into consideration … it’s kind of like, ‘What the hell are you thinking?’”
The former Coastal contractor, nonetheless, mentioned that Bierman and his workforce have introduced vital worth to Coastal, noting that a variety of the company’s shops have been considerably reworked since Bierman and Modlin have been introduced on.
“(Bierman has) a lot of experience in the industry. … He’s an operator, he’s a fundraiser, a lot of stuff. He is a valuable asset. (Coastal) saw that, they saw the opportunity, and that’s probably why they brought him in,” the contractor mentioned.
UCBA’s Kiloh additionally indicated he was inclined to reduce Bierman and Modlin some skilled slack and that their work with Coastal isn’t seemingly to have an effect on the company’s bid to grow to be a UCBA member.
“We’re all looking to redefine ourselves in the current market,” Kiloh mentioned. “If Adam and Andrew discover a manner to redefine themselves and produce worth to a new company, then extra energy to them.
“I think we should all allow people to adjust to a new market, because it was chaos back in the day. It was the wild, Wild west.”
John Schroyer could be reached at [email protected].