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Cannabis Company Files Lawsuit Against the City

MedMen wants Pasadena process stopped until the company is reinstated in the city’s cannabis selection procedures

Published on Wednesday, October 28, 2020 | 10:03 am
 

Officials with a cannabis dispensary company removed from the city’s selection process have filed a lawsuit against the city seeking injunctive relief. 

MedMen, which applied to do business in Pasadena as MME Pasadena, is asking a judge to stop the city’s cannabis approval process until the company is reinstated. 

Pasadena Now first reported in August that MME Pasadena was removed from the city’s cannabis process after an investigation revealed a material change in ownership and company management.

Qualities specific to both management and ownership were evaluated and directly impacted the scoring and ranking of permittees as part of the selection process. 

“MME Pasadena 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 the City during the pendency of this writ petition,” according to the lawsuit. 

According to a letter to MedMen from City Manager Steve Mermell, nine-out-of 10 applicants listed as owners on MedMen’s applications in the city’s process have changed since the company was chosen to move forward in the process, including Adam Bierman, who served as the company’s chief executive officer, Chief Operating Officer Ben Cook and MedMen President Andrew Modlin.

According to the city’s process, “A change of ownership and/or management is not allowed and is considered material where it constitutes a change of control.”

The review also found that Gotham Green acquired 31.9 percent of the company’s voting power and 575,434,313 shares, which makes it the second-largest shareholder in the company.

MedMen signed a $659,833.00 10-year lease in District 6 and has already spent $700,000 on licensing, professional fees, costs, and lease-related payments, according to the lawsuit.

“Over MME Pasadena’s repeated objections, more than two years after the City cannabis ordinance and regulations were adopted, and more than seventeen months after the selection process commenced, the City enacted a brand new regulation dated June 18, 2020 [the ‘June 18 14 Regulation’]. 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,’” the suit states.

The lawsuit further demands the city reverse its final decision and reverse its denial of MME Pasadena’s commercial cannabis permit application, allowing MME Pasadena to proceed to the next step in the process.

However, MedMen never reached the permitting level. MedMen was scheduled to go before the Planning Commission in April for a conditional use permit (CUP), but that hearing was canceled after questions arose about the company. A CUP is required before a commercial permit can be acquired.

MedMen (MME Pasadena), Harvest Pasadena, Integral LLC, Tony Fong, Atrium, and Sweetflower won the right to apply for the necessary permits to legally sell cannabis in Pasadena. So far, only Integral, and Tony Fong have received commercial cannabis permits.

In the letter removing MedMen from the process, Mermell said the new leaders in the company do not have a cannabis background.

“Notably, MedMen provided little to no evidence of cannabis experience of its current management team and Board of Directors, who appear to 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,” Mermell wrote. “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.”

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