The co-founders of MedMen Enterprises, Adam Bierman and Andrew Modlin, are suing the co-owners of Coastal Holding Company claiming the retail dispensary chain conspired to dump the company in a “liquidation sale,” News Primer reports. Bierman and Modlin were ousted from MedMen in June 2020, they joined Coastal as investors and part owners about 13 months ago through their LMAJ firm, the report says.
In the lawsuit, which was first reported by Law360, Bierman and Modlin claim they have the right to approve the $56.2 million sale, while co-owners of Coastal say the former MedMen executives arranged the sale and Bierman “has repeatedly expressed concern that Coastal will not survive without an immediate capital injection.”
The duo maintains partial ownership in the company, which owns eight industry licenses in California, after a $3.7 million investment. In the court filing, the five defendants claim that Coastal’s proposed sale and a disputed $1 million bridge loan were necessary to keep the business afloat and pay an Internal Revenue Service debt of $640,000.
“The defendants have abused their power and treat Coastal as their possession to do as they please without regard to Coastal’s operating agreement or their fiduciary duties to the other Coastal shareholders.” — Court documents via News Primer
The sale was unanimously approved by the Coastal board but the defendants claim that Bierman fielded a “backup offer” that he preferred over the $56.2 million deal, which the Coastal co-founders described as “far inferior to the current offer and not in the interest of the company.”
“Since defendants (and therefore Coastal) rejected Mr. Bierman’s ‘offer of support,’ plaintiff has taken every practice and maneuver he can think of to prevent the current offer from reaching a successful conclusion,” the co-founders said in their defense.
Bierman and Modlin are seeking a temporary restraining order and preliminary injunction to stop both the Coastal sale and the proposed $1 million bridge loan.
Get daily cannabis business news updates. Subscribe
End
