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SCOOP: MedMen sues founders for overpaying themselves

By Alex Halperin
Oct 8, 2022
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SoCal-based MSO MedMen sued its founders for self-dealing in the contracts they negotiated for themselves. (Legal research supported by Unicourt.)

The lawsuit alleges co-founders Adam Bierman and Andrew Modlin, along with former executive Christopher Ganan, “engaged in self-dealing in breach of their fiduciary duties” by negotiating themselves bonuses worth more than $9M “on entirely unreasonable terms.” The company paid out “at a time where MedMen was in substantial need of liquidity.”    

The complaint alleges that shortly before MedMen’s 2018 initial stock offering CEO Bierman executed employment agreements for himself, Modlin and Ganan that guaranteed them “onerous terms of compensation.” These include guaranteed payouts of $4M for Bierman and Modlin and $1M for Ganan if the company’s enterprise value ever reaches $2B.

MedMen is informed and believes, the filing reads, that the defendants “caused MedMen to reach the triggering market capitalization…all without any long-term benefit to MedMen.” MedMen’s market cap is currently around $70M Canadian.

MedMen recently used cannabis’ federal illegality as a defense in lawsuit over unpaid rent. 

The company’s rise and fall under Bierman was chronicled by Politico. Bierman and Modlin then returned to the California cannabis industry with retailer Coastal, which they then sued.  

The defendants didn’t respond to requests for comment.