Green Market Report’s Editor-in-Chief Debra Borchardt spoke with MedMen CEO Adam Bierman regarding the word from vendors that payments have been delayed. This interview has been edited slightly.

Editor-in-Chief Debra Borchardt:

We’ve confirmed that the emails posted online from MedMen telling vendors that payments will be late are real. We’ve also confirmed that vendors had said they haven’t been paid.

MedMen CEO Adam Bierman:

Those emails are absolutely, real emails. We’ve never denied those emails. We’ve been very forthright with the public, and with our investment community at large about the fact that at the end of last year we entered into a restructuring in the business, exiting the hyper-growth stage of the business, and getting into sustainability, and with that, there’s a lot of pain. And that pain starts at the employees that were on this mission with us, building this platform with us that we had to part ways with. A lot of them are like family that has been with us for a very long time.

That’s unfortunate. That’s hard. But it was necessary. During that timeframe, we stopped payments to certain vendors as would be commonplace in the restructuring of a retailer. We turned over our accounts payable to a restructuring consulting firm (FTI Consulting) so that we could preserve and allocate the cash as we got through and out the other end of restructuring. These are brands that heavily rely upon MedMen for their business. Especially in California, we understand how important MedMen is to that ecosystem and we understand what happens, and the impact, and the ripple effect it has on these manufacturers. They’re having discussions like that with our teams about structuring payments.

Some of these people are my very good friends that we came up in this business together for the last decade. But I also say that there have been plenty of times where, well, roles have been reversed and we’ve been asked to be partners, long term partners to some of these groups. I think that’s just part of building an industry. There will be times when you’ll be asked to help others out in the industry. And there’ll be times when it’s vice versa. We are probably 30 days away from being out the other end of this restructuring.

Our cash position is very healthy, our balance sheet is strong. We’ve made a couple of announcements over the last month about bringing in fresh capital by way of selling some equity as well as selling some non-core assets, and the business is well-positioned going forward. So, the unfortunate reality of growth, which we’ve all seen over the last 10 years, is what we were faced with. This is all stages. And so, this was a stage that we went through, but we’ll come out the other end and.

GMR: One of the things that you got out of the PharmaCann break up was the Illinois licenses. Are you planning on holding onto those Illinois licenses or are you thinking that you’ll see if there’s a good price for them?

Bierman: No, I think at this point in time we’ve sold the non-core assets that we believed could bring in the most near term cash and also include our near to mid-term prospects of profitability. And we’re through that. There are no additional states or assets that we currently plan to sell out. We did sell the cultivation facility, in Illinois from PharmaCann. That was one of the assets that we sold. But as far as the retail stores go, it is a market that we believe to be important to our near and mid-term health. The two stores we have open now are averaging 200 transactions per hour. That’s per store in Illinois.

GMR: The CFO situation, you guys have been through a lot of turmoil on the CFO side, and of course, that doesn’t look good to the market. Do you feel like you’ve started to get stability in that office in the C suite?

Bierman: I’ll start by saying that the Zeeshan Hyder is outstanding and the company is so fortunate to have him in that seat. I guess I would say on a broader basis, we are very aggressive in how we iterate and evolve our business. And you’ve seen it, and I’ve lived it for the last 10 years. And part of that evolution is constantly wanting the best talent with the most amount to contribute to the business and within the context of whatever stage the business is in. As you’re aware, it was only a couple of years ago that people from the traditional industry wouldn’t work in cannabis. I think we were among the first organizations in cannabis to attract talent from mainstream industry. And so, where I think where you mentioned the word turnover, we look at it as an evolution. We are constantly evolving. If we can get better, we get better.

GMR: Was hiring FTI consultants, was that part of the deal with your investors? Gotham Green? Gotham has extended a lot of credit to you guys and they’ve also kind of stepped in as part of the board, et cetera. Was that part of their idea to bring in FTI to kind of right the ship?

Bierman: Yeah, I don’t know where that rumor started cause I try not to pay attention, but there’s never been a point in time where our lenders haven’t quote, “stepped in.” We’ve had a facility as Gotham, we renegotiated that facility in the fall to get the company way more flexibility amidst this backdrop. We have a second lending group that we renegotiated with a few weeks ago that gave us way more flexibility and also pushed that out for a couple of extra years. So our relationship at this point with our lenders is solid.

I think when you talk about our primary investors, our relationship is on solid footing. Our biggest equity holder, outside equity holder, is Wicklow Capital, who wrote an eight-figure check into our equity round two weeks ago. So, we have a lot of continued support from those groups. Now, I don’t know if we would’ve had that support if we hadn’t taken all the actions we’ve taken to put ourselves in a position to thrive for what’s next. But we’ve done that, and I think, as a result, we continue to have their backing.

So, we brought FTI in to help us through the restructuring when it comes to things like AP. We brought in different resources for very specific purposes. And then some of the work we did ourselves just rather than taking all the commitments off our balance sheet in regards to payroll, extra infrastructure and projects. And then the restructuring of both facilities, plus our accounts payable.

In the fall, I recognized that I probably was six months behind taking actions that, at that point in time, we decided to take. We were down at that point in time as we sit here, middle to the end of January, we’re positioned to thrive. I mean this company has never been healthier.

It’s not just that our lenders have stepped up to support us because of their long term belief in how well we’re positioned and it’s not just that Wicklow stepped up and wrote another eight-figure check because of how well we’re positioned, it’s because how much they believe in the value of the check they just wrote. And how cheap the stock currently is versus where it will be as we execute. But me, Chris, and Andrew wrote checks into the last equity round. So, the last equity round was 60 plus percent, me, Chris, Andrew and Wicklow. And these are the people that understand what’s going on within the business better than anybody in the world. So, again not taking away from the pain and the difficulty and the stress of what that restructuring was, and absolutely having the humility to be able to admit that’s something that should have taken place six months earlier. All that, notwithstanding, and get to a place in January where maybe the people on the inside of this business understand how well positioned and undervalued it is for where it’s headed.

GMR: Well, the creditors are selfish. They ultimately want to see you succeed because that’s how they’re going to get their money back. I mean, they, it does not behoove them to send you down the drain cause then, they’re going to lose their investment. You know, they, it’s ultimately in their best interests that MedMen succeed so that they get paid back, basically.

Bierman: Yes, yes. 100%, which is why some of these rumors are just so silly. But MedMen has $1 billion in license value across all our licenses and MedMen has a market cap right now of $350 million dollars. So, I guess, on one hand, the lenders, if they believe in where we’re at, and they believe in the upside of the business. 100% that leads to the support that we have received from them, but nonetheless, we’re still in a position where if that belief wasn’t there, the net asset value of the business is over three times today what our market cap is. So, I think if that belief wasn’t there, we might’ve seen other actions taken from these lenders. So yes, you’re 100% right. This is the path of least resistance for everybody. I do think that there’s a credibility lift in the fact that they chose this route.