They’ve risen, then crashed, and they have risen again. I’m not talking about Jesus. I’m talking about the co-founders of MedMen. After getting booted from their leadership positions last year in a move discussed extensively around the industry, former MedMen CEO Adam Bierman, and former company president Andrew Modlin, have re-emerged. This time, they’re working for California-based Coastal Dispensary. And these two can’t seem to quit cannabis.
Coastal is co-owned by Colorado cannabis entrepreneur Josh Ginsburg. The company operates in a lucrative (and large) marketplace. Coastal holds retail, delivery, distribution, and manufacturing licenses around Southern California and the Central Coast. Ginsburg, a noted player in the industry, also co-founded the Denver-based chain Native Roots. While Bierman and Modlin’s roles in the company are hush-hush, they do appear to be working to raise capital for Coastal. Several industry sources told Marijuana Business Daily that Bierman and Ginsburg are old friends.
Bierman and Modlin got their start in the industry. They quickly worked their way up via management agreements for the duo to run retail shops owned by others. So while they weren’t the license holders or dispensary owners, the two effectively served as operations officers for those businesses.
The two quickly made waves in the industry. They created a sleek exterior business model that was appealing to consumers and investors alike. Once likened to the “Apple Store of Weed,” MedMen and its sophisticated retail outlets garnered a lot of media attention; when they went public in 2018, MedMen had a valuation of $1.6 billion.
MedMen was in the news for different reasons in 2019. The stock price tanked; the company laid off hundreds of employees; they also cut ties with what they termed “non-core assets.” Additionally, MedMen as a company and Bierman and Modlin were hit with many lawsuits that further eroded finances.
Executives fled the company amid allegations of questionable financial practices. One of the first warning signs was when MedMen tried to pay vendors with company equity, giving a glimpse into the company’s liquidity, i.e., there wasn’t much, if any.
The result? MedMen was as good as bankrupt. The lenders took over; they provided capital and equitized unpayable debt. Existing shareholders found their shares diluted significantly in the process. Aftershocks related to the shakeup are still palpable. In an interview with Marijuana Business Daily, Avis Bulbulyan, CEO of Siva Enterprises, a California-based cannabis consulting firm, heard from clients that Bierman directly pitched cannabis retailers, trying to raise capital on behalf of Coastal.
How two major industry disruptors could bounce back so quickly after a spectacular rise and fall irk some, including Bulbulyan. “The MedMen fallout hasn’t really concluded yet,” he said. “They’re still dealing with litigation. They’re still liquidating. They’re still trying to restructure their company. They’re still trying to get investors paid back on their bad investment,” adding, “Apparently (Bierman has) been going around to retailers and investors and pitching a retail-management concept, sort of along the lines of MedMen 2.0.”
Bierman and Modlin have not responded to media inquiries about their new venture. But industry sources report that the duo has pulled together a group consisting of former MedMen employees and worked with Coastal for at least six months. The word on the street is that Bierman is on Coastal’s board of directors, in addition to an investor. The contractor said Bierman and Modlin have been working with Coastal for at least six months.
Coastal claims on its website that it has 12 retail locations. Still, in fact, only a few are actually open for business right now. Per the California Bureau of Cannabis Control (CBCC), the company holds four active retail permits and two permits related to delivery. Coastal also has permits for two other storefronts, located in Lompoc and Santa Barbara, where Coastal’s home base is located.
While it appears that the current angle is to use Coastal as a base, complete with a savvy branding concept, it is pitching to other dispensary licensees to come into the Coastal family, ala MedMen’s signature concept. It remains to be seen whether or not unresolved conflicts from the MedMen implosion will affect Bierman and Modlin in their role with Coastal. However, it is apparent that Bierman and Modlin are attempting to rebrand themselves in the current and always changing cannabis market.
Stay tuned to see how this current partnership will evolve over time and how its strategy will impact Coastal and the industry overall.