Pasadena Cannabis Finalist MedMen Faces Increased Scrutiny

(UPDATED) This story has been updated with further comments from MedMen.

Published : Friday, June 14, 2019 | 5:42 AM

Yes The scene at the MedMen downtown Las Vegas store opening event in July, 2018. Photo by Business Wire

One of the six highest-ranked applicants for Pasadena’s cannabis retail licenses is facing increased scrutiny from the City following disclosure of a lawsuit by a former employee alleging racial and sexual discrimination by the company’s CEO.

Vice Mayor Tyron Hampton told Pasadena Now Wednesday, “If there’s any validity to any of these accusations, as one councilmember or as the Vice Mayor of Pasadena, I will ask for the city to revoke their application.”

Hampton also discussed the matter, without specifically naming the company, at Monday’s City Council meeting.

MME Pasadena Retail LLC, is a California-based subsidiary of MedMen Enterprises, Inc., a British Columbia company more popularly known as “MedMen,” whose stock is publicly traded on the Canadian Securities Exchange. The enterprise’s ownership is spread around a complex web of corporations and limited liability companies formed in British Columbia, Nevada, Delaware, the British Virgin Islands, and California, according to documents filed in court.

MedMen was the lowest-ranking of the six cannabis license finalists which were announced last week.

According to a wrongful dismissal lawsuit filed in Santa Monica in January, former MedMen CFO James Parker alleges that at MedMen he was “confronted with an environment replete with racial, homophobic and misogynistic epithets and slurs, drug and alcohol abuse, personal humiliation occasioned by the words and deeds of the CEO Adam Bierman, and Andrew Modlin, president of the company, profligate spending by both the CEO and president, their indifference to management’s fiduciary duty to the company and its shareholders, and their disdain for compliance with the law in general as well as the laws regulating publicly traded companion in the cannabis industry.”

“Over time, working at MM Enterprises evolved from miserable to intolerable,” the lawsuit added.

Reached for comment on the Parker suit, the company wrote in an email statement, “MedMen is vigorously defending itself in court against Parker’s allegations.”

MedMen continued, “This lawsuit has no impact on our daily operations. The leadership team is focused on executing on our growth strategy and driving value for all stakeholders – including our shareholders, employees, customers and communities”

Taking the issue further, Hampton said in an interview Wednesday, “I do not believe that [MedMen] should be granted an actual permit until their legal matters are complete, and we have a full understanding of what exactly has happened with the organization. That’s my opinion. I think that it should be paused. They should be put on pause.”

Hampton continued, “If the accusations are true about the misconduct with women, and the racist statements that were being made, if those are all true, I think that the city has no choice but to revoke their permit.”

Hampton noted that the cannabis retail application process has been handled by the City Managers’ office, and not the City Council.

“The City Council has not been exactly involved in the process,” he said, “but when it comes to the community benefits piece, the City Council in my opinion, should have been more in the process of what the community benefits would look like.”

Hampton said he didn’t believe that the City Council needed to involve itself in the approval of retail spaces, but offered, “When it comes to the community benefits, I think that the City Council members should have been involved and I will be asking for that to be coming back to us.”

MedMen added that, “In March, MedMen filed a response to Parker’s suit and a cross-complaint. MedMen’s response denies all substantive claims in Parker’s lawsuit. The cross-complaint alleges among other things breach of contract, breach of fiduciary duty and misappropriation of trade secrets by Parker.”

Asked Thursday whether the accusations could mean MedMen would not be allowed to operate in Pasadena, City Manager Steve Mermell responded in broader terms, saying, “We are going through a structured process of applications followed by a land-use approval process for those applications deemed most qualified based on established criteria.”

Mermell continued, ‘The City will review any and all material it receives to determine whether it has a material impact on our process or selection of applicants. Please note that Commercial Cannabis retailer permits will only be issued to those successfully attaining a Conditional Use Permit, Health Permit and Business License, and they will also need to obtain a State license.”

In addition, according to the lawsuit, former CFO Parker was also privy to hearing CEO Bierman’s racially inappropriate reference to a Los Angeles City Councilman as a “midget negro” and the CEO’s characterizations of cannabis social equity programs as “reparations”; as well as CEO Bierman’s references to a representative of the Drug Policy Alliance as a “fat, black lesbian.”

Parker’s lawsuit was recently updated in May, to reflect an allegation that CEO Bierman, President Andrew Modlin and board chair Ben Rose also conspired to engage in a short-term stock manipulation scheme that netted them “millions of additional dollars, ” according to the motion. Parker referred to the January hiring of digital agency Winning Media for $200,000.

Parker claims he is owed $17.5 million, based on stock valuations, but was denied by the company in November of 2018.

In another lawsuit brought by investors Brent Cox and Omar Mangalji, both parties recently agreed to arbitration to settle accusations of MME wrongdoing in connection with the company’s decision, after its initial public offering, to lock up certain shares of MedMen held by MMMG.

The term “lock-up”, also called a locked-up, lock-in or lock-out period, refers to a predetermined time frame in which corporate insiders, investors, and employees are not allowed to sell or redeem their shares after an initial public offering.

MedMen went on to say, “These are meritless allegations made against the company and should have no direct impact on our ability to serve the Pasadena community.”

The statement added that MedMen employees “undergo a rigorous multi-day classroom-led compliance training that includes company policies and procedures, our good neighbor policy, as well as legal training including the latest research, clinical data, delivery methods, the endocannabinoid system, and local, state, and federal cannabis laws.”

Hampton concluded Wednesday, “If the accusations are true, they 100% should be removed and permit denied.”

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