Amid a pending lawsuit and serious allegations of funds misappropriation, Canadian producer iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCPK: ITHUF) has appointed Richard Proud as its new chief executive officer and director on the board of directors.
The announcement comes in the wake of accusations by a Maryland-based cannabis dispensary, and in a RICO lawsuit filed last month, LMS Wellness Benefit LLC. alleges that iAnthus diverted at least $4.5 million of its funds into iAnthus’s other business interests.
According to court documents, a management firm hired by LMS, S8 Management LLC, which shares several executives and directors with iAnthus, made unauthorized money transfers from LMS’s account to failing subsidiaries of iAnthus.
The complaint pointed to the recent drop in iAnthus’s stock value and the company’s public doubts about its ability to remain operational as reasons for these unauthorized transfers. Plaintiffs also accuse iAnthus of trying to cover up these actions by creating a false impression of indebtedness from LMS to iAnthus.
iAnthus reported a net loss of $449 million in 2022 according to corporate disclosures. Additionally, the suit claims that iAnthus’ subsidiaries are unable to cover a $55 million tax bill and that the corporation carries $1.25 billion in debt.
LMS alleges that iAnthus’ financial troubles are due to an aggressive strategy of acquiring cannabis dispensaries in Maryland that ultimately resulted in poor management and ill-advised investments.
Proud, the newly appointed CEO, comes from an executive role as a former VP of Revenue at Curaleaf. His appointment follows Robert Galvin’s tenure as interim CEO. Galvin will continue to serve as iAnthus’s interim chief operating officer.
The lawsuit against iAnthus will add significant pressure on Proud to manage the company’s image while addressing its myriad financial and legal miseries. The suit seeks threefold damages under the Racketeer Influenced and Corrupt Organizations Act. And Proud’s leadership over the company’s Massachusetts subsidiaries is still pending approval from the Massachusetts Cannabis Control Commission.
In a statement, Proud commented on his appointment; expressing some optimism, “I am thrilled to step into the roles of director and CEO at this pivotal time for our company,” adding that his past experiences in the cannabis and retail industries position him to address the issues within iAnthus.