Rapid collapse of MedMen co-founders’ latest marijuana venture

The latest foray into the legal marijuana industry by MedMen Enterprises co-founders Adam Bierman and Andrew Modlin rapidly collapsed amid lawsuits alleging unpaid bills and a dispute with a business partner, court records and public licensing information show.

Megabud – described as a “chain of cannabis convenience stores” – launched in December 2022 with three locations in the San Francisco Bay Area.

The chain, which had ambitious expansion plans, represented at least the third legal cannabis venture for Bierman and Modlin, whose infamous tenure as MedMen executives saw the marijuana multistate operator go public on the Canadian Securities Exchange with an implied valuation of $2 billion before an equally spectacular implosion.

A second cannabis retail chain in which Bierman and Modlin owned a minority stake, Coastal Holding Co., was sold to The Parent Co. in late 2021 – a sale the pair briefly attempted to block.

Megabud emerged about a year later, and the chain appears to have struggled to maintain inventory and pay vendors within six months, lawsuits and interviews show.

According to text messages included in a lawsuit, Megabud was “closed indefinitely” by mid-September 2023, after less than a year in business.

By mid-2024 – a few months after stock in MedMen completed its meteoric rise and fall from $6.94 a share in 2018 to zero in January 2024 – Megabud’s business licenses in California had expired, records show.

Bierman, who is currently doing a media tour to promote a memoir detailing his MedMen tenure, declined comment to MJBizDaily through a spokesperson.

Bad timing for Megabud launch

Though it was Bierman who led a media tour promoting Megabud in spring 2023, corporate registration and California Department of Cannabis Control records identify Modlin as one of the co-owners of the corporate entities that held the chain’s retail licenses.

The two launched their latest retail venture at a difficult time, with declining wholesale prices and shrinking retail margins presenting well-known complications for anyone selling regulated cannabis products in California.

Megabud was one of the last retailers to obtain and activate a retail license in San Francisco before the city issued a moratorium on new stores in summer 2023, triggered by declining sales.

The company had a seemingly prime location in that city: on a busy stretch of Divisadero Street near a University of California San Francisco hospital and a major east-west transit thoroughfare.

But Megabud appears to have encountered challenges from the very beginning.

Lawsuit alleges lockouts, $80,000 in unpaid bills

As of summer 2023, Megbuds’ San Francisco location had such limited inventory that one five-pack of Jeeter prerolls taken by a shoplifter was a “big hit to us,” a store manager said in a text message thread obtained by MJBizDaily.

Then, in early September 2023, the location closed its doors by midday “due to lack of business,” according to the text thread.

Two weeks later, managers received an email informing them “stores would be closed indefinitely.”

By late September 2023, Bierman had been locked out of a location in Daly City, south of San Francisco, by one of his business partners, according to a lawsuit filed in San Mateo County Superior Court.

In the meantime, Megabud allegedly stiffed a security firm hired to patrol the Daly City and San Francisco locations of nearly $80,000, according to a separate lawsuit filed in San Francisco County.

By June 2024, licenses for those locations and a third in the East Bay city of Antioch, had all expired, according to state Department of Cannabis Control records.

That’s when Megabud informed the San Francisco Office of Cannabis that its location in that city had closed, according to an agency official.

Aaron Hertzberg, Bierman’s business partner in the Daly City Megabud, did not respond to an MJBizDaily message seeking comment sent to an email address on file with his active registration at the California Bar Association.

Previous warning about unpaid bills

Robert Bell, a San Francisco-based security contractor, told MJBizDaily in a telephone interview that he agreed to provide his services at the San Francisco and Daly City locations despite being warned by a previous contractor that Megabud didn’t pay its bills.

Nonetheless, Bell’s company provided unarmed guards at the two locations from June 27, 2023, to Sept. 12, 2023.

It was on the latter date that Bell cut off services to Megabud after the company failed to pay a single invoice, according to a lawsuit he filed last year.

The lawsuit claims that Megabud’s managers would send “proof” of checks they claimed were mailed that would never arrive.

“They just gave us the runaround,” Bell said.

“Then they closed up shop and we couldn’t get in touch with anybody – we were calling, emailing, but nobody was answering.”

Difficult time, harder terms

Investors and industry operators expressed surprise and disbelief about the ability of Bierman and Modlin to raise money and reenter the marijuana sector.

That point might be of particular salience in San Francisco, where MedMen’s signage still hangs above an empty storefront on Union Street in the city’s tony Cow Hollow neighborhood.

“I have no idea how he passed any real investor’s DD (due diligence),” one cannabis investor, who requested anonymity, told MJBizDaily via email.

Creditors accused Bierman of skipping out on bills, according to a 2020 Politico report – years before Toronto-based investment firm Captor Capital agreed to invest $30 million in MedMen at a valuation of $1 billion.

Bell, the former security contractor, told MJBizDaily that signs of trouble appeared quickly, raising questions about Megabud’s funding sources as well as its purpose.

The stores seemed to suffer supply-chain issues immediately, with sparsely stocked shelves and shifting explanations, he said.

“I know it seems weird,” Bell said, “but I think they just did a money grab.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.