Glass House Brands Sues Element 7 Over M&A Contract Breach

California-based, vertically integrated Glass House Brands Inc. (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF) announced its subsidiary, GH Group Inc., has filed a lawsuit against Element 7 CA, LLC (E7), a California dispensary with multiple locations across the state, and its principals Josh Black and Robert “Bobby” DiVito. The claim was filed at the Los Angeles County Superior Court – Central District earlier this week on November 2nd. 

The lawsuit was filed in an effort to enforce the complete transfer of retail licenses GH Group was set to acquire, per a Merger and Exchange Agreement between the two companies dated February 23rd, 2021. E7 was contractually committed to transfer seventeen retail licenses to Glass House Brands. Only three out of the seventeen have been fully transferred so far. Those three licenses are located in Dunsmuir, Hesperia, and Eureka, California. GH Group has also terminated the License Development Consulting Agreement between the two parties, also dated February 23rd, 2021. 

E7 In the News

This isn’t the first time E7 has made the news under less-than-ideal circumstances, with a Change.org petition included, garnering nearly 700/1,000 signatures. Namely, those who are against corporate cannabis. E7 filed an application with the town of Fairfax, California to operate a dispensary and delivery service. The company was accused by Fairfax residents of pushing local business owners out and bringing corporate cannabis in. The cannabis company applied for a storefront location at 1930 Sir Francis Drake Blvd, which is a family-owned acai bowl shop and cafe, Mana Bowls. “We are not a national chain and we don’t use locals as a front,” Josh Black, who was named in the Glass House Brands suit, told Marin Independent Journal. But Mana Bowls private Instagram account links the Change.org petition in their bio, potentially supplying a level of truth to Fairfax residents’ concerns about pushing out local businesses. 

There was also concern from people who didn’t want to make the town a “go-to” location for cannabis. “Fairfax already has the pot store and the CBD store,” said Ed Tilton, Fairfax resident who lives behind Mana Bowls, to the Marin Independent Journal. Parents of young children have also expressed their disinterest, as Mana Bowls is a place where families can be together. “Our town and kids need Mana Bowls. Cannabis can easily be delivered and does not need a storefront in Fairfax,” says one commenter on the Change.org petition. 

Glass House Brands feels confident the remaining fourteen licenses will be transferred. E7 has not yet made any statements about the lawsuit with Glass House Brands. 

Kaitlin Domangue

Kaitlin is a cannabis reporter for the Green Market Report, covering every angle of the industry. She also works directly with cannabis brands as a content marketer.


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