Adam Bierman to Get $3 Million from MedMen

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MedMen (OTC: MMNFF) should pony up greater than $3 million for its co-founder and former CEO Adam Bierman.

An arbitrator dominated that Bieman was entitled to $3,063,300, plus prices of $49,243.34, for a complete award of $3,112,543.34 associated to his separation from the corporate. The bottom award represents the worth of Bierman’s tremendous voting shares and a bonus of 12 million frequent shares, as of August 2020.

Beleaguered MedMen was as soon as billed as the primary unicorn of hashish, which means the corporate had a billion-dollar valuation earlier than going public, however now it’s promoting off components and drowning in debt.

“After three lengthy years, I’m glad the reality has come out and that I can lastly share my story,” Bierman mentioned. “The court docket discovered MedMen, in addition to the previous government chairman, responsible of fraud. This judgment completes the factual narrative as I passionately chased the top of prohibition.”

Nevertheless, the win could possibly be chilly consolation for Bierman as MedMen not too long ago reported that it has a working capital deficit of a whopping $137 million and famous that it’s a going concern. Medmen said that it had already defaulted on debt with a senior lender and would want to acquire an extension or refinance.

The corporate has simply $15 million in money and equivalents on the books and a market cap of solely $25 million. The inventory was promoting for lower than two cents a share.

$2 Billion

In keeping with the court docket doc, MedMen went public on Might 29, 2018, with its inventory first listed on the Canadian Securities Change.

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Days earlier than the IPO, Bierman, as CEO of MedMen, executed an employment settlement for himself, which offered amongst its advantages:

  • $1.5 million in base wage.
  • An fairness grant based mostly on a time vesting schedule.
  • A particular IPO bonus of $4 million if the corporate reached a $2 billion valuation.

Bierman acquired the valuation bonus in September 2018.

Nevertheless, the corporate by no means revisited these lofty valuations. The inventory was promoting at roughly $3.54 originally of 2019 however plunged to simply roughly 53 cents by the top of 2019.

MedMen Falls

Throughout this time, nonetheless, MedMen skilled some setbacks.

Earlier than the IPO, MedMen agreed to purchase PharmaCann, however the deal finally fell aside in fall 2019. MedMen’s inventory fell, and the corporate wanted to restructure because it cycled by means of a number of chief monetary officers.

The ultimate award assertion claims that it was the failure of that deal that brought on the inventory worth to fall, however the firm additionally was reporting heavy losses and never paying its distributors. As well as, the co-founders have been accused of enriching themselves as the corporate struggled.

“In December 2019, an investor died earlier than finishing his $20 million funding into the corporate. Initially, Ben Rose dedicated that Wicklow Capital, MedMen’s then-largest fairness investor, would make up this shortfall. Rose was each a consultant of Wicklow and government chairman of MedMen. However the dedication quickly morphed into an ultimatum: To acquire the money infusion on Christmas, Bierman, Modlin, and Ganan needed to signal private ensures on the cash, or Wicklow would permit MedMen to overlook payroll and different obligations. In Might 2019, Bierman lowered his wage to $50,000 and altered his fairness grant to be discretionary and based mostly on efficiency, for ‘investor sentiment morale,’” the assertion learn.

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Bierman’s Fiery Exit

In keeping with the assertion, on Jan. 24, 2020, Bierman referred to as Rose to inform him he was considering of stepping down as CEO.

“The following Monday (Jan. 27), Bierman met with Rose and John McCarthy, Wicklow’s normal counsel, at MedMen’s workplaces to barter the phrases of Bierman’s exit. … At occasions Rose chastised and cursed at Bierman. And sooner or later, the negotiations turned so contentious that Ganan needed to bodily restrain Rose when he bought up and moved as if he was going to strike Bierman.”

Nevertheless, regardless of an oral settlement between Rose and Bierman for 18 million shares, the written separation settlement made no point out of Bierman’s proper to a specified quantity.

In keeping with the board minutes, it was decided that the consideration MedMen would pay Bierman to give up his tremendous voting shares could be put “by means of a extra rigorous valuation course of.”

Tremendous Voting Worth

In keeping with the ultimate award assertion, Fairness Strategies valued the tremendous voting shares at $951,300. FW Cook dinner, then again, valued the 2019 extra contribution at about adverse $4.9 million, primarily concluding that no compensation was owed to Bierman for this portion.

Bierman contended that MedMen breached the separation settlement in three primary methods:

  • Counting on the Fairness Strategies report, which contained manifest errors, to worth the tremendous voting shares.
  • Counting on the FW Cook dinner report, once more with manifest errors, to worth the 2019 extra contribution.
  • Failing to situation any shares or money for the tremendous voting shares.
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The arbitrator dominated that the Fairness Strategies report didn’t include manifest errors and in addition denied Bierman’s request for “a a number of of two and a half occasions the three.7 million shares” owed to him, as a result of the claimed fraud was not “confirmed by clear and convincing proof.”

With this case behind him, Bierman mentioned he’s getting again into the hashish sport, noting that he’s engaged on a number of tasks. One is a brand new retail idea based mostly on the comfort retailer mannequin with low overhead and better margins.

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