A lawsuit claiming $600 million in damages in opposition to a medical marijuana firm that originated with a bunch of outstanding buyers in Syracuse is headed for a court docket listening to this week.
The Syracuse founders are amongst practically 30 defendants, together with Acreage Holdings, considered one of New York’s 10 registered medical hashish operators. The swimsuit alleges the corporate participated in a scheme to illegally squeeze a companion out of a medical marijuana license.
Immediately (Jan. 18), a state Supreme Court docket decide in New York Metropolis will start listening to arguments on whether or not plaintiffs David Feder and EPMMNY LLC have authority to sue Acreage and different defendants. If the case strikes ahead, it may complicate a plan for Cover Development of Ontario, Canada, to amass Acreage – a deal valued at $3.4 billion, in keeping with SeekingAlpha.com, which covers the monetary trade. Cover can be named as a defendant within the swimsuit.
Along with Acreage Holdings, the lawsuit names as defendants representatives of New Amsterdam Distributors LLC and New York Canna Inc., (NYCanna) and people together with high-profile Syracuse figures like constructing contractor Dino Dixie, former police chief Dennis DuVal and former WCNY president and CEO Robert Daino.
The Syracuse companions initially founded a company known as NYCanna round 2013. It was later acquired by Acreage Holdings. The lawsuit particulars quite a few sophisticated mergers, takeovers and different transactions within the firm’s historical past.
Attorneys representing defendants have filed motions to dismiss the case, claiming their purchasers didn’t breach a contract and that plaintiffs lack standing to sue, along with different arguments.
“As a threshold matter, plaintiff lacks authorized capability to convey this swimsuit,” a movement to dismiss says. The criticism consists of “obscure and conclusory causes of motion… asserted in opposition to the NYCI defendants (that) lack advantage below even essentially the most favorable studying of the criticism.”
Initially filed in November of 2018, the lawsuit claims EPMMNY performed an instrumental position in acquiring the medical marijuana license below which Acreage at present operates, and that defendants violated a contract for the possession, administration and management of the enterprise license. The 230-page amended criticism filed Oct. 4 seeks $200 million – the quantity plaintiffs declare the license is value – plus $400 million in punitive damages and management of the license.
In accordance with the criticism, EPMMNY, LLC was shaped in Might 2015. Founding members included Feder, Scott Bergin, Malcolm Morrison, Ian DeQueiroz and Phillip Hague – additionally listed as a defendant – all of whom had expertise within the authorized hashish trade. The group deliberate to determine a vertically built-in medical hashish firm, and search a kind of 5 licenses.
Previous to EPMMNY’s formation, members of the staff met with and started negotiating with a bunch known as New Amsterdam Distributors, LLC, which was additionally looking for a medical hashish enterprise license, the criticism says. Members of the New Amsterdam group embody Dixie, Duval, John Vavalo – a co-owner of a co-owner of J. Michael Sneakers –, Dominic Falcone – who owns a plumbing firm in Yonkers, and a pharmacist named Patrick Harvey. The criticism says Daino was CEO of Terradiol MC, a shell firm for New Amsterdam.
Members of the New Amsterdam group lacked expertise within the hashish trade, the criticism says, and agreed to partnered with EPMMNY to hunt a medical hashish enterprise license as a mixed entity known as New York Canna Inc. Within the lawsuit, Feder claims the companions agreed EPMMNY could be allotted 25% of the enterprise for getting ready the applying, New Amsterdam would offer funding and personal 75% of the enterprise.
Feder and EPMMNY allege that whereas New Amsterdam companions didn’t signal an settlement laying out the phrases of the New York Canna Inc. partnership, NY Canna Inc. submitted an software to the New York State Division of Well being in June of 2015 – which was sworn to and signed by all members – that highlighted the hashish trade expertise of the EPMMNY companions, and stated they owned 25% of the corporate.
In August of 2015 the Division of Well being awarded New York Canna Inc. sixth place out of over 40 certified candidates, one spot away from acquiring licensure within the preliminary spherical. State officers later expanded the variety of licensed medical hashish operators to incorporate 10 firms, and the corporate acquired licensure in 2017.
Nevertheless, between the primary software submission and the corporate receiving a license, members of the New Amsterdam group labored to merge New York Canna Inc. into NYCI Holdings, LLC (an organization owned solely by New Amsterdam), in keeping with the criticism. They then transferred the New York Canna Inc.’s enterprise license software to a Delaware entity known as NYCanna LLC, which is owned by the New Amsterdam group and Acreage Holdings – which was then often known as Excessive Avenue Capital Companions, the swimsuit alleges.
The lawsuit claims these and different strikes finally allowed Acreage to take full possession of the corporate, and illegally squeeze out the EPMMNY – apart from Hague, who was named chief product officer of the brand new entity.
A decide scheduled hearings on whether or not Feder and EPMMNY have authority to sue for Jan. 18, 19, 20 and 24.
If the case strikes ahead, the plaintiffs are additionally looking for to dam Cover Development from buying the NY Canna Inc. license as a part of potential acquisition of Acreage.
Sean Teehan writes for NYup.com, syracuse.com and The Publish-Customary. Attain him at [email protected].
