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MedMen's Bierman on Navigating the Marijuana Industry (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York Bloomberg eleventh, Rio to Washington,
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  Speaker 1: Appen Bloomberg dot Com. This is taking Stock. I'm Kathleen Hayes.
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  Speaker 1: My co host Pim Fox is on assignment this afternoon.
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  Speaker 1: You know, in the private equity people start getting involved
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  Speaker 1: in an industry, it's got to be big and getting bigger.
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  Speaker 1: We're gonna be speaking to Adam Bierman. He's co founder
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  Speaker 1: and CEO of Medmen, and private equity firm that is
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  Speaker 1: investing in the cannabis industry and advising and consulting potential
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  Speaker 1: investors in that industry as well. Now let's go to
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  Speaker 1: and again recapping SMP five index heading for a ten
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  Speaker 1: month high and now at a gain of six tenths
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  Speaker 1: Business Flash June listening to taking Stock with pin Box
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  Speaker 1: and Katholene Hays on Bloomberg Radio. As voters in more
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  Speaker 1: and more states embrace legalized marijuana sales, this industry is
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  Speaker 1: going from a small sort of curiosity to something that
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  Speaker 1: looks like a booming market that is here to stay.
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  Speaker 1: In fact, a study put out earlier this year suggests
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  Speaker 1: that the industry could grow to something like six point
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  Speaker 1: seven billion dollars this year in total sales. Someone who's
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  Speaker 1: not waiting to find out if it's here to stay
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  Speaker 1: or not, someone who's been in this business now since
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  Speaker 1: two thousand seven, is Adam Bierman. He's co founder and
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  Speaker 1: CEO of med Men, and he joins us in Los Angeles. Adam,
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  Speaker 1: welcome to the show. Hi, thanks for having me so.
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  Speaker 1: First of all, tell us about med Men private equity
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  Speaker 1: in cannabis sounds sounds bizarre, isn't it. It's been, Uh,
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  Speaker 1: it's been. It's been quite a road to get here.
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  Speaker 1: But um, that that is where we are. So met
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  Speaker 1: men actually started off as a management company, so we
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  Speaker 1: provide management services, not unlike those that are provided in
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  Speaker 1: hospitality or gaming. Um. And then as of the beginning
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  Speaker 1: of this year, Uh, we started our private equity fund,
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  Speaker 1: so very algast hospitality. The fund makes investments in the
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  Speaker 1: space and the management company then operates those investments. So
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  Speaker 1: how did you get into this industry? Fell into it? Uh?
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  Speaker 1: You know, we live in Los Angeles. Los Angeles is
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  Speaker 1: the epicenter for you know, the commercial legal commercialization of
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  Speaker 1: cannabis in the US and North America for that matter.
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  Speaker 1: And um, we've had uh legal marijuana here sin And
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  Speaker 1: I was running a branding, design and construction company in
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  Speaker 1: the late two thousand's and I got a phone call
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  Speaker 1: from a lady who ran a was running a medical
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  Speaker 1: marijuana dispensary UM in Hollywood, and she wanted to hire
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  Speaker 1: that company to do work for her. And by the
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  Speaker 1: time I was done with that meeting, I knew that
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  Speaker 1: I had to figure out how to enter this space.
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  Speaker 1: So that's actually how I got introduced to the space.
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  Speaker 1: And um, back then, there was really there. Most certainly
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  Speaker 1: was nobody on Bloomberg Radio talking about the the industy three.
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  Speaker 1: But there was really a really little little to no activity,
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  Speaker 1: most certainly no institutional involvement. Um. But you know, we
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  Speaker 1: we we saw that we we had an understanding that
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  Speaker 1: there was a lot of momentum that was building and
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  Speaker 1: that this would be you know what it is now becoming,
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  Speaker 1: and the way that we would take advantage of that
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  Speaker 1: was to be first movers and really getting an understanding.
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  Speaker 1: And so we do so. I think a lot of
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  Speaker 1: people it's it's a it's a complicated world because states
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  Speaker 1: can legalize you know, the the recreational use um, you know,
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  Speaker 1: medical use. Federal laws though still have not don't seem
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  Speaker 1: to be quite in sync. And that makes it a problem,
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  Speaker 1: does it for companies that want to scale up, you know,
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  Speaker 1: they really do want to invest in big production of marijuana,
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  Speaker 1: shipping of marijuana, storage of marijuana. Yes, And I think
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  Speaker 1: you know, for US, problems and roadblocks are opportunities. But
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  Speaker 1: nonetheless those those do exist. I mean, the biggest thing
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  Speaker 1: that exists is you know, each state is its own island. UM.
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  Speaker 1: And because of the fact that this is still scheduled
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  Speaker 1: the way it is, and because of all the UM
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  Speaker 1: federal illegality, there is no crossing state lines. And because
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  Speaker 1: of that, UM, you know, you talk about scaling up,
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  Speaker 1: you can't scale up in that traditional sense and gain
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  Speaker 1: those economies of scale, most specifically as an operator. UM.
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  Speaker 1: If you have a license in New York, for example, UM,
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  Speaker 1: you can't go ahead and produce you know, medical marijuan
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  Speaker 1: and ship at the Pennsylvania So UM. You know that
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  Speaker 1: is I guess on one hand, and impediment on another hand,
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  Speaker 1: it's an opportunity. Right. There's we are a very very
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  Speaker 1: quickly evolving industry. The laws, the regulations, everything is evolving
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  Speaker 1: alongside you know, the UM, the industry itself. So everything
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  Speaker 1: is evolving all at once, from regulatory all the way
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  Speaker 1: to access to institutional finance and you know and capital UM.
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  Speaker 1: All that's evolving kind of contemporaneously UM. And as that happens,
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  Speaker 1: you know, there's a there is some confusion. There's a
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  Speaker 1: serious learning curve UM. And we we actually we use
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  Speaker 1: a more positive spin. We call it informational arbitract so
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  Speaker 1: that's how we like to look at it. The uh
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  Speaker 1: your fund, right, the first nine figure fund that directly
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  Speaker 1: invest in the cannabis industry. This is very interesting because
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  Speaker 1: as the industry gets bigger, and if it's growing, there's
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  Speaker 1: a lot of institutional investors. I would think at some
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  Speaker 1: point when the industry is large and I would like
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  Speaker 1: to put some money in, and then of course the
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  Speaker 1: people think, hey, this is a great business opportunity. How
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  Speaker 1: does this fund work? Would tell us about it? Well, so, yeah,
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  Speaker 1: I mean you are right, the institutional players they want
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  Speaker 1: to be in this industry. I mean I've been taking
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  Speaker 1: those meetings on my trips to New York now for
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  Speaker 1: the last couple of years and then the last you know,
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  Speaker 1: a couple of months. Um. The speed at which the
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  Speaker 1: velocity at which that that interest is growing is just
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  Speaker 1: you know, tremendous and significant. There are very large you
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  Speaker 1: know a u M funds dollar a u M funds
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  Speaker 1: that I know because I've been having the meetings that
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  Speaker 1: have had you know, LP say hey, we want you
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  Speaker 1: to go ahead and figure out how to invest into
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  Speaker 1: this industry. You know, they're working on carve outs, are
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  Speaker 1: working on bites funds they're working on that. They don't
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  Speaker 1: move as swiftly as for example, family offices can move
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  Speaker 1: when they're investing their own dollars um And so there
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  Speaker 1: is that that information, you know, we taught we have
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  Speaker 1: the information arbitrage. They're trying to get smart on it,
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  Speaker 1: they're trying to figure it out, and then they're trying
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  Speaker 1: to be able to put themselves in a position to
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  Speaker 1: be able to invest in the space. And so for us,
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  Speaker 1: we've been in this industry for a while, we understand
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  Speaker 1: the nuances from a regulatory perspective. From an operational perspective,
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  Speaker 1: we actually believe that the biggest risk in investing in
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  Speaker 1: the spaces operational risk at this point in time. Then,
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  Speaker 1: because that is our background and we have a commanding
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  Speaker 1: understanding of that, we have the management company were uniquely
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  Speaker 1: positioned to really take capital, deploy capital directly into the space,
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  Speaker 1: you know, be able to get tech likes upside. Uh
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  Speaker 1: all right, Avan Bierman, thank you so very much. Co
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  Speaker 1: founder and CEO of med Men. They are a cannabis
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  Speaker 1: private equity firm based in Los Angeles. Just a quick
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