The Founders Of MedMen Are Back In Court (Again)
The story continues as the founders of MedMen are back in court for cannabis...
In Today’s Issue:
→ The Latest Lawsuit. 💰
→ Normalizing Cannabis. ✅
→ Trouble For Tilray. ❌
The MedMen Founders Are Back
They are headed back to court for reasons related to their new venture…
In 2019, MedMen was one of the hottest cannabis startups in North America.
Having raised over $360 million USD to build the Apple of cannabis, the founders of MedMen could do no wrong.
The rise & fall…
Unfortunately for Adam Bierman and Andrew Modlin — the co-founders of MedMen this was short-lived.
In 2019, former CFO, James Parker, filed a lawsuit claiming that he was wrongfully discharged alongside an array of other allegations.
By the end of April 2019 MedMen's COO Ben Cook, general counsel Lisa Sergi Trager, and SVP of Corporate Communications Daniel Yi all resigned.
On the 1st of February 2020, Adam Bierman resigned as CEO and surrendered all of his Class A voting shares of MedMen.
Back for more…
A little over a year after they were forced to resign from their position at MedMen, Bierman & Modlin are going back to court for cannabis.
This time, they are not accused of wrongdoing.
Rather they are claiming their new partners at Coastal Holding Co. created a scheme to sell the company in a “fire sale.”
They filed three lawsuits in state and federal court against the 5 co-owners of Coastal Holding Co. over plans to sell the company for $56.2 million USD.
This sale is to The Parent Co who has agreed to acquire 100% of the company in a cash-and-stock deal worth up to $56.2 million USD.
What do they want?
Adam Bierman and Andrew Modlin claim that as investors and partial owners of Coastal which they invested $3.7 million USD in — they have the right to approve the sale, but have refused to do so.
The owners of Coastal responded in a court filing stating that Bierman organized the very sale he is now trying to stop using the courts.
Different versions of events…
The courts will need to establish the basic facts.
“It was Plaintiff, not Defendants, who recommended, found, and negotiated” the sale of Coastal for $56.2 million, according to a court filing by the company’s other owners.
The version of events being presented by the defendants is that Adam Bierman himself raised the very concern that led to this acquisition.
“In fact, (Bierman) has repeatedly expressed concern that Coastal will not survive without an immediate capital infusion.”
It remains unclear what exactly the former Co-founders of MedMen Adam Bierman and Andrew Modlin are aiming to achieve with these actions.
Our Take
I don’t have all the information regarding the specifics of this case.
That said, if it were to become clear that Bierman & Modlin were working against the company's best interests then it will become incredibly hard for them to remain in the cannabis industry.
What’s happening with cannabis?
A new survey shines a light on key consumer trends in the cannabis industry…
The cannabis industry exists for one good reason — people really like to consume cannabis.
In a new study conducted by Azuca, they examined how often consumers consume cannabis, and why?
The when…
50% of the 1,089 people surveyed said they had consumed cannabis.
→ 14% consume cannabis daily.
→ 9% consume cannabis weekly.
→ 7.5% consume cannabis monthly.
→ 19.5% said they consume cannabis just a few times a year.
Why cannabis…
People consume cannabis for many different reasons, as is evident by the range of reasons people reported in the survey.
→ 64% consume cannabis for relaxation.
→ 43% consume cannabis for sleep aid.
→ 37% consume cannabis for wellness.
→ 39% consume cannabis for recreation.
→ 40% consume cannabis for pain management.
Additionally, in what is a clear sign that the stigma around cannabis is declining — 33% of people reported being able to consume cannabis at work.
Our Take
It’s great to see more consumer research being conducted such that we can collectively increase our understanding of cannabis consumers.
With cannabis producers across North America currently producing vastly too much cannabis vs current consumer demand, research such as this can go a long way in producing products consumers actually want to purchase.
Calling Out Smaller Cannabis Producers
The CEO of Tilray sparks controversy with some unusual comments…
As Canada fast approaches its 3 year anniversary of legalizing cannabis for adult-use purposes, large producers are running out of reasons as to why they are failing to deliver on their ambitious sales targets.
With billion-dollar losses that were initially blamed on the slow rollout of cannabis retail stores in Canada — one CEO is now changing this target.
Smaller producers to blame?
Last week, the CEO of Tilray Irwin Simon decided it was time to take aim at the growing number of small cannabis producers in Canada.
"If you look at us, Hexo, Canopy Growth, and Aurora, all together we have 50% share (of the Canadian market)”
"Underneath that, you have 450 licensed producers that are all ankle biters that are taking a little bit of share away.”
The impact of these “ankle biters” is certainly being felt in Canada where 700+ producers are now licensed to sell cannabis.
Although Irwin Simon characterized this impact as a “little bit” — the data paints a very different picture.
The top 5 producers of cannabis in Canada have lost 20% market share in the last year despite the consolidation.
→ Tilray merged with Aphria to create a $3.9 billion USD company.
→ Canopy Growth acquired Supreme Cannabis for $340 million USD.
→ Hexo acquired Redecan, Zenabis & 48 North for over $950 million.
Pointing fingers…
With such vast amounts of capital at their disposal, one has to wonder what’s the underlying cause of companies not reaching their goals?
→ Tilray lost $321 million USD in 2019.
→ Tilray lost $271 million USD in 2020.
Before Tilray’s merger with Aphria, the combined companies commanded 20% market share in Canada, however, this has since slipped to 16%.
CEO Irwin Simon will earn close to $30 million USD this year as the company continues to expand in many different directions from wellness products to alcoholic beverages, and of course cannabis.
Our Take
This was a terrible choice of words by the CEO.
As opposed to taking ownership of the problems Tilray is having, he instead choose to insult the companies that are actually succeeding where Tilray themselves have fallen behind.
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Bonus Section
→ If you like Marketing, Dutchie is hiring a Social Impact Lead.
→ If you like Sales, Jane is hiring an Account Executive.
→ If you like Marketing, LeafLink is hiring an Email Marketing Associate.
If you gained value from this edition of Four PM, share it with your favorite cannabis professionals. 🌎