MedMen co-founders, Adam Bierman and Andrew Modlin have stepped down from the company’s Board of Directors, announced yesterday. This comes after a long series of errors and Bierman eventually stepping down as CEO in February.
MedMen has made headlines in the cannabis news for the past 8-ish months, and while some issues (like the riots and sales being impacted due to COVID), were things totally out of their control, the general consensus is that the company, especially the corporate offices, have made some serious missteps along the way. MedMen has been heavily criticized in the past for its extreme spending habits and the bottomless need for more capital. Bierman and Modlin have been personally accused of handling money disproportionately to benefit themselves.
Here is a timeline of some of the missteps and out-of-their-control misfortunes in MedMen’s last eight months, that ultimately led to the co-founders to step down from the Board of Directors:
November 2019: MedMen reports a net loss of $82 million for the first fiscal quarter of 2020
Per Green Market Report’s article, “MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) reported first fiscal quarter revenue of $44 million, up 105% year-over-year and 5% sequentially. The company also reported an eye-popping net loss of $82 million. MedMen delivered an Adjusted EBITDA loss of $22.2 million for the quarter.
Approximately $7.4 million of rent expense was not included in Adjusted EBITDA for the quarter due to the application of IFRS 16 Leases. Adjusted EBITDA loss under the previous methodology would have been $29.6 million compared to a $39.4 million loss in the previous quarter.”
“We entered Fiscal 2020 on a mission to build a more nimble and financially flexible MedMen,” said Adam Bierman, MedMen co-founder and chief executive officer. “As we right-size our organization and implement an intensified focus on free cash flow generation, our business will become more efficient, in turn allowing us to better serve our stakeholders. Through the successful execution of these goals, we expect MedMen will be EBITDA positive by the end of calendar year 2020.”
November 2019: MedMen Cuts Workforce To Cut Costs
Bloomberg reported on November 15th that MedMen cut 190 jobs, including 20% of their corporate workforce. It also announced the sale of its stake in Treehouse Real Estate Investment Trust for $14 million.
December 2019: MedMen Sells Licenses to Raise Money
According to Green Market Report, “the company has executed a non-binding term sheet for the sale of its Arizona licenses, which include three vertically-integrated licenses, and a binding term sheet for the sale of a cultivation and manufacturing license in Illinois.
MedMen said it expects to get roughly $54 million in cash proceeds through the divestiture of the non-core licenses. The completion of the sale of Arizona licenses is subject to due diligence, the execution of definitive documentation and customary regulatory approvals. The completion of the sale of the Illinois license is subject to the execution of definitive documentation and customary regulatory approvals.
The company said it will continue to explore the sale of other non-core assets and will focus on deepening its retail market share in California, Nevada, Florida, Illinois, Massachusetts, and New York.” MedMen also sold some Class B subordinate shares for $20 million.
January 2020: MedMen Confirms the Rumor They Haven’t Been Paying Vendors
Former MedMen CEO, Adam Bierman, told Green Market Report, “During that time frame [in reference to a time of growing pains for the company], we stopped payments to certain vendors as would be commonplace in the restructuring of a retailer. We turned over our accounts payable to a restructuring consulting firm (FTI Consulting) so that we could preserve and allocate the cash as we got through and out the other end of restructuring. These are brands that heavily rely upon MedMen for their business. Especially in California, we understand how important MedMen is to that ecosystem and we understand what happens, and the impact, and the ripple effect it has on these manufacturers. They’re having discussions like that with our teams about structuring payments.” The news was broken by screenshots of emails being posted online telling vendors MedMen would not be paying them.
February 2020: MedMen CEO, Adam Bierman, Steps Down
MedMen announced on January 31st that their CEO was stepping down effective February 1st. He also gave up all of his Class A super voting shares as part of the deal.
“I continue to believe that MedMen is positioned to thrive. It’s time for our next iteration of leadership to capitalize on the opportunity we have created. This has been an incredible journey and I will continue to be inspired by those around the globe working to make our world safer, healthier and happier through access to legal, regulated cannabis,” said Adam Bierman.
May 2020: MedMen Says COVID-19 Impacted Sales
After releasing a fairly solid third quarter earnings report, on the company’s earnings conference call, interim CEO Tom Lynch said, “Unfortunately, COVID has impacted our sales since the end of March; we’re down in April overall, but have seen a steady increase since. While we’re still not back to our normal levels, pre-COVID, particularly in California, we’re optimistic about our ability to recapture traffic as soon as stay at home orders are lifted.”
MedMen also noted that its Nevada location had suffered saying, “We saw a decrease in overall sales in this market, particularly given the impact that the pandemic has had on tourism into Las Vegas, we’re encouraged about the recent decision to open up cannabis retail again, and have already begun to see a steady ramp-up in revenue.”
June 2020: MedMen Storefronts Looted, Robbed, and Destroyed
The Green Market Report wrote, “according to social media videos, MedMen in Los Angeles had two locations broken into and robbed. The man filming the video can be heard saying, “They are cleaning MedMen out” as protestors or just plain looters leave the store with red shopping bags, filled with the things they stole.”
Hopefully, 2021 brings better tides for the cannabis giant.