Florida-based cannabis marketing company, SpringBig Inc. (Nasdaq: SBIG), is being sued by Kind+ Inc., a Massachusetts-based cannabis subscription service, for allegedly using their partnership to create a competing business.
The lawsuit, filed Monday in Massachusetts state court, asserts that SpringBig failed to uphold a contractual agreement to promote Kind’s cannabis subscription service to its own clients and consumers. Instead, the complaint alleges, SpringBig used its access to Kind’s proprietary technology and business data to introduce a rival service last month.
SpringBig dismissed the allegations as “unfounded,” according to a company spokesperson’s comments to Law360.
Kind+ launched its subscription service in 2022, charging customers a monthly fee for perks such as discounts and additional rewards from any of its member retailers. The service is used by 18 cannabis retailers in 12 states.
In the lawsuit, Kind+ demands that SpringBig stop using Kind+ developed technology and cease any interaction with existing and potential customers. The company is also seeking damages for alleged breach of contract, bad faith dealings, and business relationship interference, including convincing at least one firm to terminate its contract with Kind+.
Where it Began
The partnership between SpringBig and Kind+ was announced in July 2022, followed by a revenue sharing agreement signed by both firms in November of the same year.
However, Kind+ alleges in its complaint that SpringBig had no real intentions of promoting or integrating Kind+ into the SpringBig platform. Instead, it contends that SpringBig used the partnership as an opportunity to develop a competing subscription offering.
According to Kind+, SpringBig failed to meet contract milestones and neglected to provide necessary resources while covertly working on its own subscription service. The lawsuit also accuses SpringBig of not promoting Kind+ as promised in the revenue sharing agreement or providing assistance in developing software for customer enrollment.
Following the November agreement, Kind+ believed SpringBig was operating in good faith. In the lawsuit, Kind+ states that it gave SpringBig “total access” to its technology and business information based on this belief.
The complaint alleges that SpringBig launched a new subscription service on May 3, which Kind+ described as a “carbon copy” of its own. According to Kind+, the recurring benefits, discounts, sign-up offers, and loyalty rewards programs were all replicated.
The lawsuit further accuses SpringBig’s CEO, Jeffrey Harris, of using Kind+’s pitch language during a May 4 earnings call – weeks before the company eventually issued a $4 million public offering.
“At present, we are focused on the introduction of select group of new initiatives,” Harris told investors at the time. “We have launched a subscriptions offering enabling our retail clients to offer their customers to pay a subscription-based VIP loyalty program, offering those customers to subscribe the opportunity to receive specific discounts and benefits not available to their wider customer base.”
Kind+ is asking the courts to decide monetary damage.