The main complaint about big money being poured into the cannabis business is that it might ultimately represent "corporatization," driving out smaller players and concentrating wealth in fewer hands. And that's certainly a valid worry. But there's another problem associated with it: the hype, inane triviality and skeeviness that has surrounded pot since states started to legalize adult-use eight years ago.
Celebrities have piled in, including lots of "controversial" ones, mainly from the third or fourth tier like Mike Tyson, Roseanne Barr and Gene Simmons. While plenty of pot companies market themselves (whether legitimately or not) as "good corporate citizens" and trade on their attention to environmental and other causes, lots of other ones seem more interested in marketing themselves by sponsoring hip-hop shows, professional wrestling matches, extreme-sports events or dance clubs. They ignore the earthy, mellow appeal of cannabis and sell it as a "lifestyle product," in much the same way that upscale liquor or high-end sneakers are marketed.
There is, of course, a lot of money behind all this. Or anyway, there was.
MedMen's founder and CEO Adam Bierman left the nationwide chain of upscale weed shops in January amid a flurry of layoffs, asset sales and lawsuits. At that point, the company was already trying to get vendors to accept equity in the company in lieu of cash, even as that equity was quickly losing its value. He and his co-founder Andrew Modlin were accused of—among lots of other stuff—spending profligately both on the company and on themselves; buying Teslas and hiring private jets, for example. They have denied all allegations of impropriety.
Bierman has long been thought of as the ultimate "weed bro," but it looks like he might now have some real competition. Last week came news that Curtis Heffernan, the president of Ignite International, who is suing that ever-pivoting weed company headed by Dan Bilzerian, a man who is often described as an "Instagram star." He posts a lot of pictures of his muscular, bearded self in party situations, often on yachts, hanging out with hot models and other party people.
Many news stories about Ignite start with him, and his reputation, finally getting to what Ignite actually does deep down in the text. There, readers learn that Ignite first sold branded weed, then turned to the CBD market and now seems mostly concerned with licensing its brand, including its goat-skull logo.
Heffernan's lawsuit claims he was ousted for complaining about Bilzarian's alleged insane levels of spending, often on himself. For instance, the company pays Bilzarian's rent of $200,000 a month for his mansion in the hills of Los Angeles, according to the lawsuit. It also foots the bill for the yachts, the parties, air travel and many other extravagances.
"He traveled the world with a harem of models that would make Hugh Hefner jealous, expecting that the company would cover it all," Heffernan's attorney said in a statement last week.
The spending would help account for the company"s financial results: it posted a $50 million loss last year.
Bilzarian denied the allegations in a statement to the celebrity gossip site TMZ.
Chris Roberts, who covers the weed business for Forbes, anonymously quoted some former Ignite employees who said the allegations were right on. Whatever product or service Bilzarian wanted, the CEO "would just have it wrapped with the Ignite logo, and all of a sudden it was an Ignite expense and he would send them the bill," one of them said. These included "Pools, trampolines, [and] his 'personal events' that had nothing to do with the business."
Ignite's stock debuted in the Canadian over-the-counter market in January 2019, trading on its first day at $2.51 a share. It proceeded to sink like a bag of hammers and—though it has zig-zagged some since then—it's now trading at just 66 cents a share.
Investors who are thinking about buying into the weed business might want to check whether the company they're considering has ever been the subject of a TMZ story, or whether any top executives are "Instagram influencers." Or better yet, just buy a mutual fund.