ProcureWISE: Navigating Procurement Success in the Hemp and Cannabis Industry

Introduction This case study comprehensively examines the ethical issues surrounding MedMen's rise and fall within the legal cannabis sector. It focuses on the ethical dilemma of financial mismanagement and corporate governance, with allegations of co-founders' misuse of company funds and questionable financial practices. The study analyzes ethical behaviors, decision models, and power dynamics. It also assesses the impact on the cannabis industry's ethical culture, compliance with regulations, leadership styles, and investor relations. Through this analysis, we draw lessons for ethical conduct, transparency, and leadership in emerging industries. In the MedMen article (Roberts, 2022), several ethical dilemmas and conflicting moral perspectives become apparent, with the primary dilemma centering on the balance between profit maximization and ethical responsibility. The co-founders of MedMen were driven by a profit-maximizing perspective, often at the expense of their ethical responsibility towards investors and stakeholders. The cannabis industry's unique background, rooted in counterculture and legality concerns, further complicated the ethical landscape. This dilemma is exemplified by the procurement predicament, where MedMen faced difficulties paying vendors, leading to questions about its ethical and financial responsibility to suppliers. Ethical or Unethical Behaviors and Decision Models Allegations against the CEO and organizational leadership, including extravagant spending using investor capital, raise concerns about the misappropriation of funds. These actions reflect a lack of fiscal responsibility and ethical misconduct. Furthermore, the lack of transparency in financial reporting and losses is another ethical concern, as it compromises honesty and accountability, impacting the trust of stakeholders. The decision model employed by MedMen appears to prioritize short-term growth and attracting investments over long-term sustainability and ethical practices (Roberts, 2022). This approach has resulted in financial instability and compromised ethical standards, especially in financial challenges and vendor payment delays (Wallace, 2020). This situation highlights a significant breakdown in procurement management, signifying the company's inability to promptly fulfill its financial commitments to suppliers, potentially affecting product quality and availability. This underscores the importance of transparent and efficient procurement management in line with Michael Porter's emphasis on streamlined supply chains and operational transparency for business success. On the positive side, MedMen actively engaged with its vendor partners to modify payment terms, even offering stock as an alternative form of payment, demonstrating an effort to maintain communication and collaboration with suppliers. Additionally, MedMen's CEO, Adam Bierman, acknowledged the challenges faced by product manufacturers and emphasized the need for collective industry navigation amid turbulence, reflecting an understanding of the broader industry context. The ethical dilemmas arise from the clash between profit maximization and ethical responsibility. It underscores the need for businesses, especially in unique industries like cannabis, to balance financial success with ethical conduct, transparency, and responsible financial management. Addressing these challenges aligns with the principles of strategic planning (Saah, 2022) and the ethical considerations crucial for long-term viability and competitiveness. These are central to Michael Porter's strategic framework vital to establishing a healthy and competitive marketplace while upholding ethical business practices. The MedMen case reveals that ethical leadership is not merely an aspiration but a fundamental necessity in navigating uncharted business landscapes. It underscores the pivotal role of leadership in fostering a culture of transparency, accountability, and financial responsibility. Power and Influence The manifestation of power and influence had both positive and negative effects. The only positive is that the co-founders' charisma and ability to persuade investors allowed MedMen to attract significant investments. The misuse of power and influence to maintain control and divert funds for personal benefit negatively impacted the company's ethics and reputation. MedMen power of choice underscores the pivotal role of structure in shaping moral behaviors within the organization (Johnson, 2021, p.56). It emphasizes recognizing the power of choice individuals hold at all levels, wherein ethical decisions are made. This framework distinguishes between disablers, which impede ethical conduct, and enablers, which facilitate it (Johnson, 2021, p.286). Leadership and power concentration are central challenges, particularly concerning ethical decision-making, as they wield significant influence over the organization (p.135). Moreover, it raises the question of whether an excess of power may lead to ethical lapses. In light of MedMen's leadership turnover and financial woes, effective ethical leadership and equitable access to ethical decision-making power are vital components in fostering an ethical and sustainable organizational culture. Ethical Leadership Theories The leadership and followership ethics of servant leadership were used to assess MedMen's situation, as reported in the article (Johnson, 2021, p. 216-217). There were limited demonstrations of servant leadership, as the co-founders' actions needed to prioritize the well-being of stakeholders over personal gain consistently. Some aspects of transformational leadership were evident in their ability to inspire investors, but the focus on personal gain undermined this. On the one hand, the frequent CEO changes and financial instability contradict servant leadership principles, emphasizing stability, ethical conduct, and financial well-being. On the other hand, these changes could be seen as efforts to improve the company's fortunes, prioritizing employee welfare and potentially aligning with servant leadership values if they emphasize transparency and accountability. Conflicts and Negotiation There is apparent conflict and violations with MedeMen's code of conduct, business, and ethics (MedMen, 2022). MedMen presents several apparent violations of the company's Code of Business Conduct and Ethics policy. These include allegations of unethical spending by top leadership, a lack of transparency in financial reporting, potential conflicts of interest, bribery or improper payments, inaccuracies in financial records, mishandling of confidential information, and potential failures to follow reporting procedures and prevent retaliation. These actions contradict the policy's core principles of honesty, accountability, and fair business practices. Conflicts between investors and the co-founders highlighted a disconnect in ethical culture, with investors seeking transparency and ethical conduct while co-founders prioritized expansion and profitability. Challenges Internalpersonal trust involves obligation or duty of moral dimensions; trust also imposes ethical demands (Johnson, 2021, p.122). Earning the trust of others starts by demonstrating moral values and character (Johnson, 2021, p.83), as Johnson (2021) states (p. 122). A lack of trust emerged between investors and co-founders due to allegations of financial misconduct and extravagant spending. Groups tend to bring out the moral best and worst in leaders, which means transforming teams so that they spur leaders to higher, not lower, moral performance(p. 246). MedMen ethical group danger signs included allegations of misappropriation. Accusations of MedMen running the company like a personal slush fund raised concerns about ethical misconduct within the organization. Scripture and Worldviews The ethical landscape of the cannabis industry is marked by the intersection of religious perspectives and the ethical challenges posed by capitalism. Religious perspectives cast a shadow on the cannabis industry due to its historical association with recreational drug use. The industry remains morally suspect for some religious communities despite legalizing cannabis for medicinal and recreational purposes. This viewpoint stems from deep-seated reservations regarding the plant's historical role in illicit drug use. The tension between capitalism's profit-driven motives and ethical responsibility forms a core ethical dilemma within the cannabis industry. Pursuing financial gain often collides with moral values, creating intricate ethical challenges. MedMen's Downfall was due to financial mismanagement. The relentless drive for financial growth took precedence over ethical conduct, severely damaging the company's reputation (Roberts, 2022). MedMen's struggles mirror more significant issues within the cannabis retail sector. It underscores the industry's ongoing struggle to balance profit objectives and ethical responsibilities, particularly concerning financial transparency (Wallace, 2020). MedMen's ongoing financial instability and frequent leadership changes underscore the dilemma between profit-driven motives and ethical leadership within the cannabis sector. This instability serves as a reminder of the critical need for ethical leadership when navigating uncharted business territories. Conclusion The ethical culture at MedMen appeared to prioritize financial growth and market dominance over ethical conduct. This culture contributed to decisions that ultimately harmed the company's reputation. The issues at MedMen serve as valuable lessons, underscoring that ethical leadership extends beyond mere rhetoric; it is a tangible asset for any organization operating in emerging industries. Leaders must seek profit maximization and prioritize ethical conduct, as the consequences of ethical lapses can have profound effects, eroding stakeholder trust and long-term viability. In the rapidly evolving cannabis industry, marked by shifting legality and public perception, ethical leadership is paramount. Leaders must navigate the complexities of the marketplace with integrity, recognizing that organizational ethics are not optional but imperative for enduring success. This examination of MedMen's ethical challenges highlights the critical importance of ethical leadership in shaping an organization's reputation and sustainability. It reinforces the notion that ethical conduct is inseparable from long-term prosperity, emphasizing the need for organizations to uphold ethical standards while pursuing financial growth and market leadership. As leaders, we will find wisdom in the scriptures. Just as Genesis 1:12 reminds us of the goodness of God's creation, we should approach the cultivation and use of cannabis with responsibility and stewardship. In the spirit of Corinthians 14:40, let us strive for decency and order in our actions within this industry, ensuring that ethical values guide our decisions. Ecclesiastes 3:1-8 reminds us of the ever-changing seasons of life, urging us to adapt our ethical conduct to the evolving landscape of the cannabis sector. Psalms 104:14 underscores our role in cultivating the earth's resources, including cannabis, for the benefit of all. Finally, Proverbs 25:16 warns against excess, serving as a cautionary note to maintain balance and moderation in our approach to cannabis. While some religious organizations may hold reservations, it is essential to approach this industry with knowledge, understanding, and a commitment to ethical principles that align with our diverse beliefs and convictions. References Johnson, C. E. (2021). Organizational Ethics: A Practical Approach. SAGE. 9781544395395 King James Bible Online. (2023). King James Bible. OFFICIAL KING JAMES BIBLE ONLINE: AUTHORIZED KING JAMES VERSION (KJV). Retrieved September 17, 2023, from https://www.kingjamesbibleonline.org/ MedMen. (2022, October 2). CODE OF BUSINESS CONDUCT AND ETHICS. MedMen. Retrieved September 16, 2023, from https://drive.google.com/drive/folders/1CvtbxXzcAsjU7JnSqSSCLYvAswHkBca_ Roberts, C. (2022, October 2). MedMen’s Failure Is Everything Wrong With Legal Cannabis (And Is Only The First Company To Implode). Forbes. Retrieved June 19, 2023, from https://www.forbes.com/sites/chrisroberts/2020/06/19/medmens-failure-is-everything-wrong-with-legal-cannabis-and-is-only-the-first-company-to-implode/?sh=73579f94113c Saah, P. (2022). Critical Factors for the Successful Implementation of a Strategic Business Plan among Small and Medium Size Enterprises. International Review of Management and Marketing, 12(6), 19-28. ProQuest. https://doi.org/10.32479/irmm.13280 Wallace, A. (2020, January 28). Cannabis retailer MedMen falling behind in paying its bills. CNN. Retrieved September 16, 2023, from https://www.cnn.com/2020/01/28/business/medmen-cannabis-behind-vendor-payments/index.html

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Social and economic factors shape and determine the dynamics of a society and affect the behaviors of particular groups, also known as a socioeconomic class. The most interesting behavior of members of a socioeconomic class is their behavior as business owners. Different socioeconomic classes will generally have different priorities, and this will affect how they run their business. Why do some minority groups do better in business than others? The problems confronting ethnic entrepreneurs are typically seen as issues of information networks, culture, training, regular suppliers, and cheap workers. People of color have faced hurdles in joining the burgeoning legal cannabis industry, despite bearing the brunt of marijuana arrests from the United States’ war on drugs. While there are many things we can do individually to make this moment stand for change, as business leaders it is important that we look at how each of our business models either supports the Black, Native and other minority communities, or how it contributes to systemic racism. It is time for businesses to begin questioning not only how we hire, support and promote minority employees but how your business sources for both your indirect/direct purchases and contracts. Now is the time to take a look at your procurement processes. What are set-asides anyway?Government already presumes members of certain racial and ethnic groups are socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged. As a result in 1953, supplier diversity programs were created “to give minority, women, and what has since been classified as underutilized small business owners, an opportunity to secure contracts with government agencies, major companies, and corporations.” Today, supplier diversity initiatives benefit a spectrum of socially and systemically disadvantaged small business owners, who are often disenfranchised due to ethnicity, race, gender identity, orientation, and class. Typically, when any company procures goods and services, they often reach outside the local community to find these resources. Supplier diversity strategies seek to reverse this outflow. Not only does this benefit the workers and businesses within the community, but it advantages the company as well—by improving the quality of an organization’s efficiency, increasing market share, and providing new revenue sources. One reason supplier diversity increases market share and revenue streams is the shifting generational demographics of the consumer base. Millennial and Gen Z are not only today’s largest generations, but also the most diverse. Both are more likely to purchase and enter into a business relationship with companies that advocate social responsibility, support women- and minority-owned businesses, and visibly align with their values. In a world where resources are increasingly scarce and societal and environmental challenges are substantial, every dollar counts. Executing inclusive procurement practices enables businesses to use their economic influence to maintain and possibly improve upon quality and cost metrics while supporting the communities they live in or the causes they believe in. Some might say our world of social tensions, of huge discrepancy between the advantaged and the less-advantaged, and divergence between the employed and the unemployed, has a main differentiator at its root – economic empowerment (rather lack of it). Imagine having the power, the ability to make decisions that could narrow those gaps. You could make a massive contribution to the greater good of society. Supplier Diversity sits high within the overall U.S. corporate strategy and is mandated in many areas of the government supply chain, focus is more on measuring spend with minority-owned businesses. However, measuring spend should not be the only criteria to measure success, as in many cases that leads to bad procurement behaviour. Measuring the number of new businesses introduced to the supply chain and the socio-economic impact it makes in communities should be the new benchmark for measuring success of supplier diversity. It is my hope that hemp and marijuana businesses across the nation will consider setting aside their company purchases and contracts for not only minority groups, but include women and veteran owned small businesses as well. This will help provide a level playing field for all businesses in the space.

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