AD INVESTIGATION Lavish Parties, Greedy Pols and Panic Rooms: How the ‘Apple of Pot’ Collapsed MedMen was the country’s hottest pot startup—until it flamed out. Its fall has exposed the gap between “green rush” hype and the realities of a troubled industry. Illustration by Julien Pacaud B y BEN SCHRECKINGER a n d M O N A Z H A N G 05/24/2020 07:03 AM EDT Ben Schreckinger is a national correspondent for POLITICO. Mona Zhang is the states cannabis policy reporter for POLITICO Pro. he warm California sun shone down on Adam Bierman as he stepped T up to the ceremonial ribbon strung across the entrance of his latest triumph: a new store on Abbot Kinney Boulevard in Venice, the hottest retail strip west of the Mississippi. Bierman stood facing a pack of clamoring photographers. Behind him, inside the shop, were besuited politicians, including Congressman Ted Lieu, who had come out to show their support. The actress Rosario Dawson, now known in Washington as Cory Booker’s girlfriend, was also on hand, recording the scene on her iPhone. Bierman, who styled himself the Steve Jobs of the “green rush” into legal weed, sported a red hoodie emblazoned with a white pot leaf. It was early June, 2018, barely a week since MedMen, the cannabis business he led, had gone public on a Canadian stock exchange, boasting an implied valuation of $1.6 billion. “We want the world to walk in and see what the future looks like,” he said. “And the future is right here on Abbot Kinney.” At the time, MedMen indeed looked to become the Apple of pot, the first mainstream, nationwide consumer brand for the product that drove so many Americans to ingest and invest. Marijuana liberalization was sweeping the country. A nascent industry was taking shape. No company was better poised to reap the rewards than MedMen was. Then, just a few months after its Abbot Kinney opening, it all began to unravel. The company got hit with a class-action lawsuit from employees alleging labor law violations. Miffed investors sued the founders, accusing them of self- dealing and other underhanded tactics. A former chief financial officer filed a blockbuster complaint in a Los Angeles court accusing the founders of a slew of misdeeds, from manipulating MedMen’s stock price, to bank fraud, to seeking private intelligence groups to get dirt on their enemies, to calling an L.A. city councilman a “midget negro” and making an illegal straw man contribution to a Nevada politician. The suit alleged excessive spending on security—including installing a panic room in Bierman’s home—as well as using company funds on the likes of a custom Tesla SUV, “pearl-white” Cadillac Escalades, and a salary for Bierman’s personal marriage counselor. MedMen and Bierman have denied wrongdoing in those cases, and are fighting the claims in court, but investors have lost their patience for nine-figure losses. In January, Bierman resigned as CEO. The company’s stock now trades for a fraction of what it did just months earlier. The company’s fall reverberates far beyond its stakeholders, because its glitzy rise was propelled by the promise of an entire industry. Its woes reflect the precarious status of the cannabis business: legalized by states but still criminalized by the federal government, its position makes traditional bank financing impossible and puts companies at the mercy of a patchwork of regulators. The industry’s promise has been tarnished, too, by business failures, corruption and concerns over an influx of foreign money. Still, as the nation’s most recognizable cannabis brand and one of the industry’s first unicorns—those rare startups that exceed $1 billion in enterprise value—MedMen had a better chance than most to overcome the unique challenges of the weed business. It hired lobbyists, shaped legislation and funded legalization campaigns. It had the backing of powerful politicians. It had a partnership with Gwyneth Paltrow’s chi-chi lifestyle brand, Goop, and an award-winning ad directed by Spike Jonze. It had a marketing campaign dedicated to ending the “stoner” stigma, part of its plan to make cannabis inviting to affluent “Chardonnay Moms” from coast to coast. And for those who still embraced the stoner ethos, it acquired the rights to the Woodstock brand, too. It hired executives from the ranks of corporate American icons like Walmart and Apple, as well as edgy tech firms like Grindr, the gay hookup app. In addition to its storefront on Abbot Kinney it opened one on Fifth Avenue. In writing up MedMen’s Manhattan boutique, Vanity Fair noted that the store sat directly across the street from a WeWork location, a setup that, at the time, seemed to offer a captive population of potential patrons. But instead of following in the footsteps of Apple, MedMen has gone the way of its 5th Avenue neighbor. It has become the WeWork of weed, an overhyped startup whose sky-high valuation has come crashing back down to Earth. In the wake of its fall, the firm has left behind a trail of unpaid bills and unsettled legal allegations. After riding, and driving, the legalization revolution, it has come up against the quotidian realities of local red tape and federal inertia. It has lost more than 95 percent of its market value, and an irritated creditor is setting its eyes on the deed to Bierman’s waterfront mansion. Now, having served as the face of one of the great marketing blitzes of recent years, Bierman, 38, has gone uncharacteristically silent. Neither he nor his co- founder, Andrew Modlin, 33, responded to requests for interviews. Lawyers for the two men at the firm Quinn Emanuel Urquhart & Sullivan also did not respond to requests for comment. A spokesperson for MedMen declined to comment “after giving it some thought.” MedMen stands as a cautionary tale of American Wild West capitalism. But interviews with former executives and industry insiders, along with legal filings and public disclosures, show it’s also a flashing red warning light that the emerging cannabis industry is not yet ready for primetime—even if MedMen’s slick marketing videos are. “MedMen may be the most egregious case of a highly capitalized company in this space, but look across the space,” said one former executive at the firm. “Who’s profitable right now? Who’s feeling really really good about it?” MedMen, cannabis insiders say, is just the most colorful illustration of what happens when a young industry groping toward the world of legitimate big business is forced to exist under an uncertain regulatory regime that no other sector has to contend with. “I hate to say it,” lamented the former executive. “You’re dealing with regulators who are just kind of making it up.” “Until you treat cannabis and regulate cannabis like every other business is regulated in the United States today,” said Steve DeAngelo, a longtime cannabis activist-turned-investor, who has watched the MedMen saga unfold up close, “you will be creating opportunities for mischief.” At rst, as he recounts the story in interviews, Bierman thought his new client had misspoken. The elderly woman with wild hair kept saying she brought in $300,000 in revenue monthly, when she meant to say annually. There was no way, he thought, that her run-down little pot dispensary on Sunset Boulevard could be raking in $3.5 million a year. It was 2009, long before the advent of legal recreational weed, and Bierman was not aware of California’s mom-and-pop medical pot industry—if you could even call it an industry. At the time, he and his young business partner, Modlin, were running a branding firm, mashing up the names MODlin and bierMAN and calling it ModMan. ModMan helped small, wellness-related companies like the old lady’s dispensary upgrade their image. When Bierman finally gathered that the old woman had her numbers right, he realized that he was in the wrong business. ModMan became MedMen, and Bierman’s trade became medical marijuana. For most people, such a radical pivot would be disorienting, but Bierman was a restless entrepreneur. His life had more or less been lived in a constant state of transition. Born in Arizona in 1982, he bounced around the country during his childhood before landing, as a teenager, in southern California. Always one to show hustle, he posted a 4.0 GPA at La Costa Canyon High School, north of San Diego, while playing second base well enough to be recruited for college ball, according to a brief item published in the San Diego Union-Tribune during his senior year. Even Bierman’s approach to high school partying went above and beyond. At 17, while his classmates were drinking beers in basements and raiding their parents’ liquor cabinets, Bierman rented out a roller rink in Oceanside, just up the coast from his hometown. He threw a dance party for students across the region, charging them admission. For music, the teenage party promoter hired an up-and-coming hip-hop group from Los Angeles called the Black Eyed Peas. The party was an entertainment success and a financial disaster. “I didn’t do very well on the deal and the Black Eyed Peas ended up not being paid and left pretty upset,” Bierman recalled years later. “But hey, you know?” The next few years of Bierman’s life can be stitched together from old news clippings and online bios scattered on the internet. After a year at Division III Brandeis University, in Waltham, Massachusetts, he was soon back in California, transferring to Los Angeles City College, and then the University of Southern California in Los Angeles.