If the cannabis industry insists on marketing weed as an upscale boutique brand it will die. Just ask MedMen.
Politico’s Ben Schreckinger and Mona Zhang took an in-depth, behind-the-curtain look at “South Park’s” favorite cannabis mega-conglomerate, MedMen, last week, detailing the rise-and-fall of what was once the preferred dispensary of the let them eat cake crowd. In an exclusive investigation, the two reporters give a thorough account of how former CEO Adam Bierman flew too close to the sun, attempting to — not unlike Theranos founder Elizabeth Holmes — imitate his idol, Steve Jobs, if not substantively, at least in style. But is the downfall of the “Apple Store of Weed” a cautionary tale for the cannabis industry at large, as Schreckinger and Zhang argue, or is it another in a myriad of corporate excesses that make for good gossip in the business pages?
On the surface, the Politico piece has all the necessary trappings of a parable meant to moralize the three-ring circus of a regulatory system that oversees the American cannabis industry. In one example, as the article explained, open windows at one store saw MedMen run afoul of Florida’s advertising ban against the devil’s lettuce. But frosting the windows to cover up the store’s activity to the outside world went against local police ordinances, forcing them into an impossible Catch-22 that one former employee described as Kafka-esque.
“It happens because the rules and regulations just don’t make sense,” the executive told Politico.
Schreckinger and Zhang dedicate ample column space to explaining the multitude of cracks and fissures in the “separate but unequal” system that is state-level legalized cannabis in an era of national prohibition. There’s higher federal tax rates, banking issues, problems with credit card processing and online advertising, and the ever-present threat of a crackdown from the Department of Justice thanks to Jeff Sessions’ reign of terror.
And to be clear, all of this is true, beyond any reason of a doubt. Despite Mitch McConnell’s protestations that House Democrats COVID-19 stimulus bill mentioned cannabis an excessive number of times, it would have provided much-needed relief to an industry that employs more people than coal and was ineligible for the first round of aid that went out in April.
But Bierman’s — and by extension MedMen’s problems were substantially more significant than any regulatory hurdles and, as explained by Schreckinger and Zhang, were, in many ways, the byproduct of a festering rot coming from inside of the house. It’s a traditional tale of corporate greed, complete with fast cars, a $300,000-a-year personal marriage counselor, and a kombucha machine for the office.
“It was nuts. It was literally nuts,” one anonymous source told Politico.
And then, of course, there were the lawsuits. Employees filed a class-action suit alleging labor law violations. The former CFO took Bierman to court, claiming everything from bank fraud to stock manipulation to racism in the workplace.
As Politico noted, both Bierman and MedMen denied wrongdoing in each lawsuit and are fighting the accusations in court. But lousy press begets terrible press, which isn’t suitable for stock prices. As shareholders grew tired of the rodeo, Bierman was forced to resign.
Schreckinger and Zhang write a compelling story and make a top-notch case for just why the US needs to put its fucking house in order so the cannabis industry can have a chance to succeed. MedMen stock is down 95 percent since 2018, but the company can’t file for bankruptcy because weed is still illegal, and right now, there’s about a zero percent chance of Congress doing shit about it.
But as compelling as that case is, it does little more than scratch the surface of the reasons for MedMen’s downfall nor the shell of what’s left of the broader cannabis industry. After all, the industry has been gobbling up former politicians with lucrative lobbying deals and board memberships over the past few years. From across the globe, names like John Boehner, Bill Weld, Antonio Villaraigosa, Brian Mulroney, and Vicente Fox have become prominent advocates for the nascent weed market, some of them one-time “tough-on-crime” conservatives that “re-evaluated” their prior positions once they saw just how lucrative it all could be. It’s not that the regulation problems aren’t real, but the tide has been turning.
MedMen’s ultimate failure, and perhaps that of the cannabis industry at large, has been the insistence of marketing a commodity crop as an upscale boutique brand to a middle-class professional clientele. Cannabis is no longer a product; it’s a brand.
“Where the traditional dispensary experience could feel grungy and illicit, the MedMen in ‘WeHo,’ with its wood-paneled interior, aimed for sleek sophistication,” write Schreckinger and Zhang for Politico, noting that the MedMen experience, with its iPads and glass cases, was more 5th Avenue than Walmart. As Mike Adams pointed out in Forbes a few years ago, the insistence by the industry of turning weed into wine has pushed out a built-in base of cannabis consumers who want a no-frills experience sans fancy boxes and focus-grouped brand names. Legitimate business owners are left to fight over the soccer moms and micro-dosing dads who enjoy the occasional high on the weekend after the kids go to bed.
And it’s given rise to a healthy and robust illicit market.
As Adams noted late last year, 43 percent of Canadians still purchase cannabis from the illicit market — and marijuana is legal nationwide. The same problem exists in the states too, but instead of addressing it outright, the suit and tie crowd hobnobs at MJBizCon and worries about whether or not this will be the year that cannabis will be legalized. Meanwhile, with every new report that states the cannabis industry will be worth so many billions of dollars within the next ten years, companies are cutting hundreds of more jobs every month.
Commercialized weed has done itself no favors either by making enemies out of the mom and pop growers that built this industry over the last century. Over the past month, for example, the Humboldt County Sheriff’s department has raided or eradicated at least 10 grows in the region. In some ways, it could be argued they’ve gone from being a law enforcement agency to a corporate weed protection racket.
MedMen is a cautionary tale, and as the piece in Politico shows, its downfall is a complicated one with many moving parts. Bierman was an entrepreneur first before he knew anything about cannabis. For too many in this industry, marijuana is nothing more than their latest idea for the Shark Tank —something to be improved upon and then sold to shareholders and venture capitalists. Yes, the US needs to reform its regulatory system for cannabis to ensure business owners — especially minority business owners who are too often passed over — can compete with some sort of safety net underneath them.
And yes, corporate greed plays a role too.
But until the cannabis industry starts paying attention to its core base of consumers, the men, and women who fought so hard to legalize the plant in the first place and not just the upscale customers who purchase a bit of weed on the weekend, then stories like MedMen’s will continue to become all too familiar.