A monthslong MJBizDaily investigation into the business practices of marijuana multistate operator MedMen Enterprises reveals a widespread pattern of not paying invoices, abruptly closing stores and terminating employees without warning.
According to internal communications obtained by MJBizDaily, regulatory filings and interviews with dozens of cannabis brands, industry vendors and former employees, MedMen frequently disregarded invoices, breached contracts and ignored exhaustive attempts to resolve outstanding balances.
Some of MedMen’s top executives, including former CEO Ellen Deutsch Harrison and acting Chief Financial Officer Amit Pandey, were included in online exchanges with brands and contractors seeking restitution for their unpaid invoices for months, according to emails obtained by MJBizDaily.
One California distributor that’s owed tens of thousands of dollars is planning to file a lawsuit against the Los Angeles-based company, MJBizDaily has learned.
Other contractors – some owed upward of five figures – are contemplating legal action against MedMen as well, sources told MJBizDaily.
The developments coincide with the recent closures of three MedMen stores in California, ongoing layoffs and a management shake-up.
Once one of the most celebrated brands in the regulated marijuana industry, MedMen’s fall from grace has led to deep financial and regulatory troubles.
As the company burned through tens of millions of dollars on the balance sheet and a multibillion-dollar valuation, its perception as an investor and industry darling in the early days of marijuana regulation has morphed into a retail pariah in California and other markets.
Store closures and past-due regulatory filings
MedMen is still one of the most well-known marijuana operators in the country, and its stores often are lauded for their sleek, modern designs.
The multistate operator has about 20 stores in California, Illinois, Massachusetts, Nevada and New York, but that number is shrinking amid its latest restructuring.
MJBizDaily reported on Jan. 31 that the company initiated another round of corporate layoffs.
A day later, local media outlets reported that MedMen unexpectedly shuttered its flagship location in West Hollywood, scarcely a month after the company had shed other assets across the country.
The West Hollywood closure came days after the company’s third leadership change in less than two years.
On Tuesday, MJBizDaily first reported that the company closed two Northern California stores in Emeryville and San Jose.
Meanwhile, MedMen is nearly a year behind on quarterly financial reporting required of publicly traded companies.
The most recently filed quarterly financial statement, ending in April 2023, highlighted a severe cash crunch as the company ended the quarter with $7.6 million in cash or cash equivalents and a working capital deficit of $383.2 million.
Regulatory filings with the U.S. Securities and Exchange Commission show the company has been involved in several significant lawsuits related to unpaid invoices. The plaintiffs include:
- Business brokers over asset sales fees.
- Office furniture vendors in Indiana.
- Several landlords in New York and elsewhere.
MedMen also spent millions of dollars to settle alleged breaches of real estate contracts and related damages for unpaid rent.
In late January, MedMen’s share price on the OTC Expert Market, where the company trades as MMNFF and once commanded $7.52 per share, sank to zero.
MedMen did not respond to MJBizDaily requests for comment.
Gut punch
Punch Distribution has been trying to collect on its MedMen invoices for more than a year.
A few months ago, Los Angeles-based Punch received an unexpected check, but the payment covered less than 10% of the total, co-founder Samantha O’Donnell told MJBizDaily.
The exchange prompted Punch to make follow-up calls with MedMen executives to develop a payment plan.
The cannabis brand that Punch represents and was attempting to collect payment for has a near-decade relationship with MedMen, according to O’Donnell.
“We try not to let retailers run up these crazy bills that they won’t be able to pay, but due to the long-standing relationship, we felt comfortable with continuing to release new orders,” O’Donnell said of continuing to work with MedMen despite its outstanding balance.
But as checks received from MedMen became smaller, the time between payments became longer.
Fed up, O’Donnell said she sent MedMen executives an email last month threatening legal action.
The email garnered an immediate response from then-CEO Harrison, who recommended a Zoom call to hash out the details.
On the day of the scheduled call, O’Donnell’s team was told Harrison couldn’t make the meeting.
A few days later, Harrison resigned from the top post, along with board Chair Michael Serruya.
Harrison did not respond to questions MJBizDaily sent via direct message on LinkedIn.
After the resignations, MedMen requested to pay Punch Distribution the remainder of its debt over a year, O’Donnell said, calling the offer “crazy” because MedMen already had surpassed its term agreements.
Late last week, O’Donnell instructed her attorneys to start the litigation process against MedMen, seeking payment for invoices totaling between $50,000 and $70,000, she told MJBizDaily.
“Unfortunately, that’s just where we are,” she said.
An industrywide issue
West Coast Cure (WCC) reached its own boiling point when MedMen continued placing new product orders while failing to pay down its substantial outstanding balance.
The Orange County, California-based cannabis brand is one of the largest in the state, with an extensive line of flower strains, concentrates, edibles and vape products sold at hundreds of retail outlets.
WCC Chief Marketing Officer Jonathan Jones declined to provide an exact amount his company is owed by MedMen, but he signaled that “six figures” is in the ballpark.
“It’s probably more money than anyone else would want to have on their books,” Jones told MJBizDaily during a phone interview.
There’s a good chance WCC also lost products that were in MedMen’s possession when the retailer abruptly shuttered its West Hollywood storefront.
Some shoppers were unaware of the closure when they arrived at the store on Santa Monica Boulevard, WeHo Times reported Feb. 1.
“Personally, it’s really frustrating because it makes it difficult to operate in the space,” Jones said of the MedMen fallout.
The issue of unpaid invoices in the marijuana industry extends far beyond MedMen.
The problem has become systemic for operators nationwide – and particularly those in California, the world’s largest cannabis market.
Some of WCC’s retail customers have invoices that are more than 120 days past due to the company, Jones said.
“There’s quite a few storefronts that owe us money,” he said. “The issue is industrywide. It’s not isolated to just MedMen.”
‘Only paying critical accounts’
Alina Nguyen was hired in 2021 as an editor for MedMen’s blog Ember, which publishes educational and brand content about cannabis culture.
The Los Angeles resident moved into an interim full-time contract marketing role in 2022, after a round of layoffs eliminated key marketing leaders and the entire creative department, she said.
Nguyen’s role morphed into a marketing manager position, in which she developed MedMen’s content calendar and hired and onboarded copywriters, marketers and other editorial freelancers.
She spent a year rebuilding a skeleton team for the multistate operator.
“I was pretty integral to the company,” Nguyen told MJBizDaily during a phone interview.
Around August 2023, Nguyen told MedMen she planned to stop working for the company unless her colleagues were paid.
By then, Nguyen said, MedMen was behind on her paychecks and those of three other contractors in her department.
More than a month passed without payment.
On Oct. 5, Nguyen received an email from a MedMen accounts-payable manager confirming that several invoices were not paid.
“We are only paying critical accounts right now due to our cash constraints,” the manager said in an email obtained by MJBizDaily.
“We will pay these bills when we are in a better position.”
Nguyen highlighted that response in follow-up emails sent to MedMen’s payroll and legal departments as well as corporate executives.
She received a brief response from Harrison, implying this was the first time she’d heard of the problem.
Then, correspondence went dark.
Nguyen hasn’t heard from the company in months, and she is owed more than $6,000.
“They have ghosted me since November,” she said.
Desperation ultimately led Nguyen and a few others to talk with MJBizDaily.
“Going public may be the only thing that’s going to get them to pay. I’ve followed up so many times, it’s unbelievable,” she said.
“I’m tired, but I’m still going to keep pursuing this. MedMen can’t get away with doing this to so many small businesses and families.”
Naima Davis said she has not been paid by MedMen since July 2023.
The Atlanta-based contractor specializes in search engine optimization. She handled website analytics and developed quarterly tracking reports for the MSO.
Davis’ $1,500 monthly retainer covered software subscriptions she paid for out of pocket.
After a month passed without a paycheck, she sent emails to various departments as well as Harrison, who said she would look into the matter.
“Then, I waited,” Davis told MJBizDaily. “I did not hear anything back.”
Her last correspondence with MedMen was in November.
Davis said the company owes her $2,000, including $500 for software subscriptions.
“I’m a single mom. Any dollar that comes out of my wallet impacts my children,” Davis said.
“We’re human beings. We have families, and not paying us affects our families.
“Whether you think we deserve it or not – or whether it’s a small amount, a large amount, whether it’s my full-time income or my supplemental income – it’s still my livelihood.
“And it still impacts my family.”
A public shaming
Since 2017, MedMen has carried Kush Queen products at its California stores, providing the woman-owned cannabis brand with exposure both on the company’s shelves and through its Ember blog.
Late last year, the retailer stopped paying invoices to Kush Queen’s distributor, Beyond Legends.
After weeks of back-and-forth email threads with the company, including exchanges with Harrison, Kush Queen founder Olivia Alexander had enough.
In late December, she blasted MedMen on LinkedIn, Instagram and X, formerly known as Twitter, for not paying a $1,560 bill.
Her posts generated more than 100,000 views and plenty of industry chatter about MedMen and the pattern of unpaid invoices by cannabis retailers, perhaps the biggest challenge facing marijuana brands nationwide.
“I’m really sick of these companies behaving this way,” Alexander told MJBizDaily in a phone interview. “I’m taking a stand.”
The public shaming worked, and MedMen recently paid the invoice.
But the episode left an impression on Alexander and tainted her yearslong partnership with MedMen.
“Even if they wanted to order more, we would stand in solidarity with those owed funds and never deliver them more product,” she told MJBizDaily via email.
More layoffs, upheaval
MedMen initiated another round of corporate layoffs on Jan. 26.
The number of employees affected is unknown, but personnel in the Los Angeles-based company’s accounting and marketing departments were among those laid off, sources told MJBizDaily.
One terminated employee learned of the layoffs on Jan. 29, three days after MedMen sent termination notices.
The employee, who requested anonymity for fear of jeopardizing future job opportunities, learned about the layoffs after reading a termination notice sent to their personal email.
“I’ve emailed the HR department. I’ve called. Nobody is responding,” the source said.
“This was very cruel. They treated us like trash.”
Cesar Orquiz, who worked in MedMen’s retail store in San Diego for four years, was laid off Feb. 5, along with roughly 15 other workers at the Kearny Mesa location.
During his last few shifts, Orquiz said he saw few customers as inventory dwindled.
Several big brands canceled product shipments to the San Diego store in the past month or so, he told MJBizDaily in a phone interview the day after his job was terminated.
Orquiz said MedMen closed certain employee accounts and revoked access to his pay stubs and W-2 forms.
“So, I can’t file for unemployment right now,” he said.
Other former MedMen workers told MJBizDaily they are struggling to gain approval for unemployment benefits outside California because MedMen has failed to report the layoffs to the appropriate state agencies.
“It’s taken a toll, and it’s been very stressful,” Orquiz said.
Another marijuana industry open secret
“Everyone knows that nonpayment is the single-biggest issue that every brand is facing,” Kush Queen’s Alexander said.
The widespread problem is considered another open secret in the cannabis industry, yet marijuana brands and distributors have been reluctant to call out bad actors through social or mainstream media.
Their stance is understandable, considering dispensaries and cannabis retailers are the gateway to consumers, brand development, sales and, ultimately, growth.
MJBizDaily contacted dozens of cannabis companies, service providers and former employees – all of them believed to have outstanding invoices with MedMen – but only a handful would speak on the record about their experiences.
While unpaid invoices are a marijuana industry problem nationwide, the issue is pervasive in the California market, where it has festered for years.
The topic went viral on social media last week, after a video surfaced showing Norman Yousif, CEO of the Off the Charts retail chain, boasting about how much money his company “saved” by avoiding payments to mom-and-pop cannabis brands.
“Do you know how much money we saved by not paying the vendors because they went out of business, or they never collected?” Yousif said in the video. “We’ve saved hundreds and hundreds of thousands.”
Off the Charts operates 17 stores in California and one in New Mexico, according to its website.
Lawmakers in California and New York last year proposed establishing credit terms for the cannabis industry, akin to those established in the liquor space.
The legislation, which would have required marijuana companies to pay product invoices within a set time frame, died in committee.
Also in 2023, a group of California distributors and brands representing more than half the state’s wholesale B2B cannabis market hired a credit association to rate retailers in hopes of reducing hundreds of thousands of dollars in unpaid invoices – and reining in repeat offenders.
The group and its members declined to provide MJBizDaily with credit reports for MedMen or other retailers.
“I don’t understand how companies like MedMen can exist,” Alexander said.
“They’ve burned every bridge. There’s nothing left for them.”