Multistate cannabis operator MedMen Enterprises has been in hot water since the company’s top executives faced a $20 million lawsuit last year. In recent news, the Los Angeles-based cannabis MSO has been informed that it cannot obtain a conditional-use permit for the launch of a retail outlet in Pasadena, California.

In spite of MedMen’s long run as a major cannabis industry player – the company launched in 2010 and boasts numerous dispensaries spread across Arizona, California, Florida, Illinois, New York and Nevada – the recent rejection of its conditional-use permit indicates that even the most well-established companies can be disciplined by regulators if they are not consistent with management and ownership.

Based on the details of a document that local news outlet Pasadena Now managed to get its hands on, management upheaval was a significant influencer in regulators’ decision.

“A material change in ownership and/or management in MedMen such that the evaluation and scoring of MedMen’s Application is no longer valid,” reads an excerpt from the letter, which was addressed to the company’s leadership team by a city manager.

MedMen owners have changed since original application for conditional-use permit was submitted

One of the primary reasons why MedMen’s application for a conditional-use permit – which enables cannabis retailers to legally operate in the city – was turned down is due to the fact that nine out of 10 company owners featured on the original application have effectively changed. 

Ex-president Andrew Modlin and former CEO Adam Bierman are just two company owners that are no longer affiliated with MedMen; Modlin and Bierman stepped down from their leadership roles in January, before officially departing in June.

Pasadena officials also noted how control of the company has changed since the conditional-use permit application was filed by MedMen. Specifically, investments from Gotham Green Partners – a New York-based private equity group – granted GGP “the ability to control management and the direction of MedMen.” 

MedMen lost a medical cannabis dispensary license in June

What was once believed to be the most valuable cannabis companies in the United States has been dealt one blow after another. According to a report by Forbes, the once-thriving cannabis industry leader has lost 95 percent of its value per quarter. Now, the Pasadena ruling adds to the company’s list of failures, which also includes the loss of a medical cannabis dispensary license in Staunton, Virginia, this June.

Now, MedMen is expected to sue Pasadena for their decision; a spokesman for the company says that it has been treated unfairly.

“We believe the city has treated us unfairly and inconsistently from how they have treated other applicants, and the August 27th letter addressed to MedMen is flawed and filled with factual inaccuracies. We intend to seek relief in court,” said a spokesperson the day after MedMen was alerted of its application being rejected.

Cannabis stock investors can find MedMen trading on the Canadian Securities Exchange under the ticker “MMEN” and on U.S. over-the-counter markets under the ticker “MMNFF.”