HighTimes Sues Original Magazine Owners

HighTimes Holding Corp. said the former owners lied during negotiations.

HighTimes Holding Corp. is suing the people it bought the High Times Magazine from, saying the former owners lied during negotiations, which caused damages in excess of $10 million. This complaint was filed on Oct. 27, a day after HighTimes Holding Corp.’s deadline for signing an investment agreement that would’ve bailed the company out of its financial predicament.

Part of the HighTimes financial pressure was due to the money it owed on the original purchase of the magazine.

High Times History

High Times magazine was originally founded by Tom Forcade in 1974, but he died in 1978. Michael Kennedy, a civil rights attorney who fought many of the publications’ early legal battles, served as chairman of the company and was one of the trustees who took over following Forcade’s death.

Kennedy and his wife, Eleanora, served as majority shareholders in the company, with Michael serving as general counsel until his death in 2016 when ownership was transferred to a family trust that then became Trans-High Corp., or THC. THC owned High Times Magazine and the once-successful Cannabis Cups. 

In June 2017, High Times – or rather the company THC – was acquired by Oreva Capital in a deal valued at $70 million, which was roughly five times the company’s revenue. The actual amount paid, however, was $42 million.

Oreva was founded by Adam Levin, the current CEO, and made up of a group of 20 investors.

Kohl’s Case

This new case blames members of the Kennedy family for misrepresenting a lawsuit with former CEO David Kohl, saying that not telling the truth about Kohl’s termination cost the company $10 million. Kohl was president and CEO of High Times from Sept. 2015 to April 2016.

HighTimes Holding said Eleanora Kennedy didn’t disclose everything regarding pending litigation with Kohl.  However, the new complaint has an exhibit from the acquisition papers with the pending litigation and the case of Kohl vs. THC included.

Kohl claimed he was terminated without justification and owed three years of salary plus rights to an equity interest in the company. He was asking for $6 million.

THC countersued saying Kohl had breached his employment contract. It also alleged he looted company assets and  “used the THC corporate credit card for personal expenses totaling in excess of $10,000.” These expenses allegedly “included charges related to a trip to Dubai.”

Now HighTimes Holding Corp. is pointing to a 2018 deposition in which Eleanora Kennedy said that the reasons for Kohl’s termination were either false, “exaggerations,” or that she had no personal knowledge of those causes of termination. Kennedy said she didn’t think he had looted the company and also said she wasn’t involved in the termination discussions as her husband was dying.

This contradicted an earlier statement from Eleanora Kennedy in which she said she was involved in the termination discussions. Either way, the case was settled with Kohl, and he received an amount in excess of $75,000, but it doesn’t state  exactly how much. 

HighTimes says in its complaint, “Had HTC, as purchaser, known about these omissions regarding Kohl’s termination, HTC would have demanded extended negotiations to uncover the facts of the Kohl Action and renegotiate the purchasing price of the THC to reflect the true liability which could result from the Kohl Action.”

High Times also accused Eleanora Kennedy of misleading them as she wanted out of the company following her husband’s death. The company said it would have walked away from the deal had it known the true story and the potential negative publicity of the case. 

However, the Kohl case was already written about in the New York Post and other publications long before the acquisition, so any potential negative publicity was already in the market.

Making the situation even messier, last year Trans-High sued its legal firm Ansell Grimm & Aaron P .C. and Joshua Scott Bauchner for the letter that was sent to Kohl terminating him. In a 2021 interview with Law360, Bauchner shot down the accusations.

“We were not even retained at the time Mr. Kohl was terminated and thereafter, the board retained us,” he said. “And in consultation with the board, we prepared a letter to justify a for-cause termination.” Law360 wrote, “He added that Michael J. Kapin, the attorney representing THC, is now looking for a scapegoat.”

This lawsuit comes as HighTimes Holding Corp. is in default on its existing debts and scrambling to come up with new investor money. Green Market Report wrote on Oct. 20 that High Times Holding Corp. filed an update with the Securities & Exchange Commission on Oct. 19 that it was in default on its loan to ExWorks for $28.8 million, which was the company that lent HTC the money to buy Trans-High. The company had a deadline of Oct. 26 to produce an investor agreement, but the SEC website shows no new filings for the company.

1544000-1544337-https-ecf-cacd-uscourts-gov-doc1-031138838388

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


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2 comments

  • Adam B Gone

    November 1, 2022 at 7:29 pm

    This looks like the typical Adam move that when backed into a corner when he needs money he pulls out an old issue and is trying to blackmail the former Board Member to pay to deal with ExWorks pending foreclosures. One only has to look at the 2017 and 2016 audit of HT that discloses a potential $6 million legal issue (Kohl). In other words Adam knew but instead of trying to settle (stock and money) he pushed back and hoped it would go away. Adam was going to make this deal regardless of any issue, and the price was inflated to deal with his inflated ego.

    Reply

  • Adam B Gone

    November 7, 2022 at 11:07 am

    Looks like on the same day as the HT filing Eleanora countered with her own. Just 8 more days for the 2nd default date for HT to pay ExWorks which I think is a long shot at best to happening.

    Eleanora Kennedy et al v. Hightimes Holding Corporation et al

    Case Summary
    On 10/26/2022 Eleanora Kennedy filed a Personal Injury – Other Personal Injury lawsuit against Hightimes Holding Corporation. This case was filed in New York County Courts, Supreme Court Civil Term located in Washington, New York. The case status is Pending – Other Pending.

    Reply

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