Investor Demands MedMen Execs' Homes Over Troubled Loan None

Milestone Investments LP said in a complaint Monday that three executives agreed to put up their homes to backstop the loan, which was tendered last December to help MedMen stay afloat as it grappled with unpaid bills and a share price wallowing at more than 90% below its one-time high.

Alaska-based Milestone said it repeatedly asked MedMen's sidelined co-founders, Adam Bierman and Andrew Modlin, and current Chief Strategy Officer Christopher Ganan to hand over the deeds of trust within 15 days of executing the loan. Only Ganan has complied, according to the complaint.

Milestone said it also loaned the trio $2 million to purchase more than 4.6 million MedMen shares on the condition that they would pay down the loan with any proceeds from selling the stock. Milestone said it believes the men have no intention of doing so.

Milestone said it sent the three men notices of default on March 26, but to no avail. It asked the court to order Bierman and Modlin to surrender the deeds and declare that all three must pay down the $2 million loan by selling the shares they purchased.

Bierman resigned as MedMen's CEO in January, when the company acknowledged it would stop paying bills to vendors as it underwent a "restructuring." The company said Bierman and Modlin had agreed to surrender their super voting shares, leaving them with nearly 5% stakes apiece.

The share price in the cannabis retailer, which operates stores in six states, has dropped roughly 90% over the past year. Last October, MedMen and medical cannabis company PharmaCann cancelled their planned $682 million all-stock merger, citing poor market conditions for cannabis as well as regulatory hurdles.

The January leadership shuffle came after several outlets published reports claiming the company was telling vendors it couldn't pay what it owed.

On Jan. 26, MarketWatch reported it had viewed emails where MedMen had offered to compensate a creditor in shares or a cash payment for half of what it was owed. Alternatively, MedMen could pay the full amount, but it would have to be on a payment plan, the report said.

A MedMen spokeswoman did not immediately respond to a request for comment Wednesday.

Milestone is represented by Garrett S. Llewellyn of Barnes & Thornburg LLP.

Counsel information for MedMen was not available Wednesday.

The case is Milestone Investments LP v. Ganan et al., case number 20STCV14302, in Superior Court of the State of California, County of Los Angeles.

--Additional reporting by Diana Novak Jones. Editing by Adam LoBelia.

For a reprint of this article, please contact reprints@law360.com.