Ousted MedMen Executives File Suit Against Their Own Company

A company run by the ousted co-founders of cannabis giant MedMen MMNFF, Adam Bierman and Andrew Modlin, are suing Coastal Holding Co., a company that holds several cannabis licenses in multiple California cities, over planning to sell the company for $56.2 million, reported Law360.

The complaint was filed by an entity called LMAJ LLC, whose officers include Adam Bierman and Andrew Modlin, who both resigned from the company last year.

Bierman and Modin claim that, as partial owners of Coastal, they have the right to approve the sale. Or not.

The Parent Company GRAM GRAMF, a leading vertically integrated California cannabis company announced on Monday that it had signed definitive agreements to acquire 100% of the equity of Coastal Holding Company, LLC for $16.2 million in cash with contingent consideration of up to $40 million in equity.

However, according to the complaint, the principals of the cannabis dispensary chain are selling off the company without consulting the shareholders whom, they say, 

should have a say in the matter.

Coastal responded in a court filing saying that it was the Plaintiff, not the Defendants, who “recommended, found, and negotiated” the sale of Coastal for $56.2 million.

In the meantime, Bierman and Modlin revealed their participation in Coastal. They became involved with Coastal in August 2020 through a $3.7 million investment made by a corporation they registered in Delaware. 

“This would be a dead-bang hit for violations of failure to disclose owners and financial interest holders,” Hilary Bricken, a Los Angeles-based cannabis attorney, told MJBizDaily.

According to the disciplinary guidelines of the Bureau of Cannabis Control of California, the maximum penalty for Coastal in such a situation could be the revocation of at least one of its eight permits, and even a minimum penalty would result in a 45-day license suspension.