Startup and investor bros in the tech geek world adopted habits of reckless spending and excessive partying during those heady early days, where bad behavior was not just tolerated but even encouraged, according to an article in the New York Times.
Now it’s the canna-businesses turn. Fast-moving canna-bros took the industry to unbelievable heights, partying like dot.com billionaires-to-be. But as the stock prices show, the correction has begun. The party is over.
What went wrong? As tricky as it is to create the next greatest software, the dot.com guys never had to face a dozen or so of the obstacles that the canna-bros face: Cannabis is a federally illegal substance, a plant that is not easy to grow. Plus, banks don’t serve the industry, insurance is not available, small business loans are not available, you can’t advertise even on Facebook, you can’t distribute across state lines, taxes are so high that consumers go back to the black market, which continues to thrive, and Congress refuses to move the needle on legalization which would fix nearly all of those issues.
Yikes. Talk about an impediment to success. Jumping into a game like that is not for the faint of heart. Or the killer business builder.
Tilray’s stunning decline came under the watchful eye of President and CEO Brendan Kennedy, an avid Ironman competitor, and an engineer graduate with an MBA from Yale.
This nascent industry is full of trapdoors like no other industry, and an entrepreneur and whatever bro-crew he can put together, with solid backgrounds in business management or retail or manufacturing, is up against a new kind of monster, Yale MBA be damned.
Cannabis is a state-by-state mash-up of messy business rules and regulations. Prices go up, taxes go up, packaging and grow regulations change and the investor or startup guru has to retool or rework an entire network of properties or lose an entire crop, spending millions, borrowing more, scaring off investors, while constantly trying to scale up the business and somehow make it profitable.
That ain’t what canna–bros expected. They expected cool parties, wide-eyed respect from business people in other industries, Hollywood celebrities texting them while they lift weights and tan in their local gym showing off their tattoos before jumping into their Maserati.
MedMen was one of the first huge cannabis businesses, led by cannabis bro guru CEO Adam Bierman, who says he is a canna-bro of Kennedy at Tilray, which was the first U.S. cannabis company to sell shares to the public, and knows the seven canna-bros (who are actually brothers) at Stanley Brothers, makers of Charlotte’s Web cannabidiol oil.
Interviewed on stage during the 2019 National Cannabis Industry Association (NCIA) Seed to Sale show in Boston in February, Bierman was, as bros are wont to be, still loud and proud about his business.
Bierman’s favorite song is Eminem’s “Lose Yourself,” which he described as “the soundtrack to my life.” He says that some of these cannabis companies, like Canopy Growth, have crashed because they just “managed stock” with narratives about the industry, instead of concentrating on business fundamentals and building equity with brands.
The cannabis culture is faced with things that the tech geek culture didn’t have to face, like social media, he says. “We are a public startup coming up in a brand new age of fake news and Twitter and noise and nonsense like that.” That social media noise factor recently jumped up a notch for MedMen.
A lawsuit by the company CFO, James Parker, who was fired in November 2018, outlined a classic canna-bro bad behavior scenario at MedMen, involving new houses, private jets, and a custom Tesla, all while Bierman was taking a $1.5 million annual salary. MedMen recently announced layoffs.
Meanwhile, other class action lawsuits against Tilray, Canopy Growth, and others are piling up, and canna-bros are scrambling for cover. Seems like the party is over, broham—at least for now.