.MedMen’s Demise: Harbinger of Valuing Cash Over Flash?

Obviously, we should all feel bad for the MedMen employees who are now out of jobs after the once-seemingly-high-flying company finally declared bankruptcy last week and announced that it would wind down operations.

But that aside, anybody who wants to see a healthy, thriving legal-cannabis industry should breathe a small sigh of relief over the news.

Or at least we can hope that MedMen’s demise is a harbinger of change. Cultivated Daily thinks it is: “The halcyon days of young, inexperienced founders raising millions on bold promises to build flashy-yet-unprofitable cannabis companies are over, as investors look for returns and to back diligent operators,” the cannabis newsletter declared on Monday.

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That’s no doubt partly true, at least for the time being. But it took a lot more than just MedMen’s crash-and-burn to get investors to look for “diligent operators” where, previously, a lot of them just looked for the flash.

It only takes a quick look at the industry—the taxes, the regulations, the often-slim margins, the competition from the illicit market, the millions of things that can go wrong—to know that a lack of diligence will mean certain death.

Unlike, say, tech entrepreneurs during the dotcom bubble of the ’90s, cannabis companies can’t really ride for year after year on investor money raised solely on the basis of bullshit marketing drivel. In cannabis, you have to make sales, and those sales have to earn a profit. MedMen tried to emulate the tech boom, and failed miserably. Investors will feel forced to be more wary, and less credulous.

Cannabis Bubble Pops

At the same time, though, we still live in America in 2024, a land where an obvious lunatic and maladapt is widely considered to be business genius and a tech visionary even as he stumbles about, woefully mismanaging giant companies that sometimes literally get people killed, making insane promises, saying bigoted stuff, and affirmatively providing a platform for literal Nazis to gather. “Late capitalism” has become a cliché for a reason.

Cannabis isn’t free of soulless tech-bro operators whose primary motivations are cash and hip cachet. It likely never will be, though few will measure down to Adam Bierman, the bro who founded MedMen.

Bierman’s tale has been told countless times, including in this space, but it involved stuff like massive, mindless spending on expansions and acquisitions, lavish bacchanals, Teslas for execs, insane levels of compensation, and stuff like him installing a panic room in his house. He’d been gone four years already when MedMen’s final slide began in January as it closed a bunch of stores and its stock was delisted upon reaching a value of zero.

The new management did what it could but the damage was done. In March, MedMen closed its last Bay Area location in San Francisco and had just two stores left in California, both in Los Angeles. At its peak, MedMen operated dozens of stores in more than half a dozen states. After it went public, it was “worth” more than $3 billion at its peak.

Death of a Unicorn

Before that, it had become the pot industry’s first “unicorn” (a private company valued at more than $1 billion). Despite the implosion he caused, Bierman is still proud of that fact. On his LinkedIn page (where he lists his current profession as “Cannabis Futurist”) he actually brags about the company’s erstwhile unicorn status.

There is little room in cannabis for excesses like the ones that killed MedMen. People like Bierman were attracted to the business because it’s still sort of outré and because they were expecting a gold rush. Reality quickly set in, but not quickly enough to save such people from themselves, or to save the industry from near-collapse. And it won’t keep mercenary types from entering the business, especially if and when the business starts to turn around.

Still, the void left by MedMen might serve as something of an opportunity for those people in the business—and there are many—who just want to make a good living doing what they love.

Find more columns by veteran journalist Dan Mitchell.

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