MedMen has filed a lawsuit against the city of Pasadena, California asking officials to stop the cannabis business licensing process until the company is reinstated, Pasadena Now reports. MedMed, which applied to do business as MME Pasadena, was removed from the process after a material change in ownership and management was revealed.
In a letter to MedMen, City Manager Steve Mermell said that nine-out-of-10 applicants listed as owners on the company’s applications had changed since the firm was chosen to move forward with the process. The letter points out that former CEO Adam Bierman, former Chief Operating Officer Ben Cook, and former President Andrew Modlin are no longer with the company but are listed on application documents.
Bierman and Modlin stepped down from their leadership roles and left the firm last June. The departures followed reports that the company offered its vendors shares in the company in an attempt to reduce its overhead and conserve cash. In April, Milestone Investments, an early angel investor in the company, filed an official complaint against Modlin and Bierman along with Christopher Ganan, who still serves as chief strategy officer, over unpaid debts.
Under the city’s rules, “A change of ownership and/or management is not allowed and is considered material where it constitutes a change of control,” according to Pasadena Now. The lawsuit argues that those rule changes came on June 18, 2020, more than two years after the city’s regulations were adopted.
“The June 18 regulation, which was not even hinted at when applications were originally solicited by the city and submitted, retroactively defines what operational and/or managerial changes constitute a ‘change of control,’ and invalidates any application [after review and scoring of that application is complete] where a ‘change in control’ has occurred that ‘would have impacted the substantive scoring of the application such that a different outcome would have been likely.’” – MedMen in court documents, via Pasadena Now
In the letter to MedMen, Mermell argues that the company “provided little to no evidence of cannabis experience of its current management team and Board of Directors,” noting that the new executives “have primarily retail and food and beverage experience at retailers such as Frederick’s of Hollywood, David’s Bridal, Guess, Coffee Bean & Tea Leaf, and Whole Foods.”
“No evidence was provided that any of the current management team have comparable cannabis permit experience, such as that provided by Bierman, Modlin and Cook,” Mermell said in the letter.
According to the lawsuit, MedMen signed a $659,833.00 10-year lease in and has already spent $700,000 on licensing, professional fees, costs, and lease-related payments.
MME Pasadena, Harvest Pasadena, Integral LLC, Tony Fong, Atrium, and Sweetflower were the companies awarded the right to apply for the necessary cannabis permits. So far, the report says, only Integral and Tony Fong have received the permits.
MedMen argues that it “will suffer irreparable harm because other cannabis license holders within the City will be given a head start in developing and capturing valuable market share for the sale of adult-use cannabis” within Pasadena while the case is in court.
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