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Will Covid Sap the Hype?

In Culture
MAD WORLD: MadMen will go down in the history of legal weed 
for its meteoric rise and spectacular fall.  Photo by Daniel Li

MAD WORLD: MadMen will go down in the history of legal weed for its meteoric rise and spectacular fall. Photo by Daniel Li

There’s been lots of chatter over what the cannabis industry might look like after the Covid-19 pandemic passes.

Most of the time, the attention is focused on how business is doing. So far, things are looking somewhere between “not bad” and “actually pretty good, considering.” Or, people wonder, will states hold off on moves toward legalization or regulatory reform as lawmakers concentrate on dealing with the fallout from the virus? In California, anyway, that’s looking pretty grim. Deeply desired cuts in pot taxes likely won’t happen until next year, if at all.

But there’s another question that probably can’t yet be answered yet: Will the “green rush” end, leading to a cannabis business that is less shallow, less celebrity-focused, less mercenary and less comparable to the buzz-driven, dot-com boom of the late ’90s, with its lavish spending and bacchanalias, terrible business models and, ultimately, its ghastly flameout at the turn of the century?

Observationally, the desire for a more stable, if perhaps somewhat less “exciting” cannabis industry seems to be swelling. I’ve been talking to people and watching Zoom meetings among cannabis professionals, mainly folks of the old-school variety, and a lot of them seem pretty fed up with all the hype and nonsense. The owners of High Times, stung by falling revenues and fleeing executives, recently decided to add cannabis retailing to its core magazine business, a move that has puzzled many observers and angered others.

Politico on Sunday published a long, deep examination of MedMen, the company perhaps most emblematic of the hype-driven aspect of the cannabis business, and its founder, Adam Bierman. The headline: “Lavish Parties, Greedy Pols and Panic Rooms: How the ‘Apple of Pot’ Collapsed.”

Before the pot industry started to collapse last year, the arrogance was thick at MedMen, which has turned out to be much less like Apple than like WebVan, the mega-hyped dot-com grocery-delivery company that didn’t just lose money, it lost money on every sale before inevitably flaming out in 2001. (Politico compared it to a more recent crash-and-burn: that of the remote-workspace provider WeWork).

MedMen was sued by employees alleging foul labor practices. It was sued by stockholders alleging self-dealing. It was sued by its own former CFO alleging everything from stock manipulation to outright fraud. Bierman reportedly had a panic room built in his house, using company cash, which he also allegedly used to buy Teslas and Cadillacs. He resigned in January.

It’s hard to know what will happen with MedMen now. But it already will go down in the annals as a symbol of the early days of the legal-weed industry: a meteoric rise and a spectacular crash.

Its woes reflect the precarious status of the cannabis business: legalized by states but still criminalized by the federal government, its position makes traditional bank financing impossible and puts companies at the mercy of a patchwork of regulators.

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