lawsuit Archives - Green Market Report

Debra BorchardtJuly 11, 2022


William McKenna, the former Finance Director for Los Angeles-based cannabis company THC Designs filed a lawsuit against the company on July 6, 2022. McKenna claims he was fired for refusing to defraud investors and tax authorities went the company’s owner Ryan Jennemann asked him to doctor the financials. He claims he was asked to reduce the liabilities so that the company could borrow more money. McKenna also thinks that the company was growing and selling psilocybin mushrooms for cash and not recording those sales.

Cooking the Books

McKenna said he was fired on February 9, 2022, despite having performed his duties and was given no reason for the termination. McKenna also stated in the complaint that the termination was one month before his wedding, which took away some of the wedding joy. The termination also threw him into debt and other hardships as he claims he wasn’t paid all of his wages upon his termination. McKenna’s previous job was as an Accounting Director for SoFi Stadium, home to the LA Rams and LA Chargers sports teams. He was drawn to the offer from THC Designs of $150,000 per year with a monthly performance bonus of $4,167 because he was getting married soon. He began his employment on July 12, 2021.

He says in the complaint that within his first month of employment Jennemann asked him to remove liabilities from a balance sheet that was being prepared for an
investor in an effort to obtain a $15 million loan. “Plaintiff refused to provide the doctored accounting because he reasonably believed removing the liabilities from the balance sheet report would be fraudulent and illegal.” McKenna also alleged that the prior Director of Finance, Dave Eing, was asked to do the same and he also refused. The complaint says, “Ryan Jennemann ultimately had a third-party contractor remove the liabilities from Defendants’ balance sheet in order to obtain the loan.”

Magic Mushrooms

McKenna also alleges in his complaint that the company was growing psilocybin or magic mushrooms and selling the product for cash but wasn’t declaring the income. He says he was expected to declare the operating expenses, but not the income. The complaint states, “Plaintiff’s suspicions were confirmed when Mario Suazo (former Director of Sales) texted Plaintiff that he had magic mushrooms for sale. (Plaintiff did not purchase the mushrooms.) Plaintiff asked Defendants’ third-party accounting manager if she was aware that Defendants were selling magic mushrooms, to which she replied, ‘they are great!'” Internally, the company was describing the product as shitake mushrooms to avoid detection, he claims.

McKenna said that on December 9, 2021, the California Department of Tax and Fee Administration (“CDTFA”) him asking for vendor invoices for a list of entities, including “Mushroom
Farm.” Jennemann said that he fired his previous Director of Finance Dave Eing for submitting to the CDTFA information that referenced “Mushroom Farm.” This time, Jennemann told Mckenna not to reference “Mushroom Farm” or “Sabina Farms” and instead to reference only “XXX E 32nd St” (the location of the mushroom farm). (THC Designs has asked that the address not be published for the safety of the people at the location.) He says in the complaint he became increasingly concerned that the illegal operation would result in a tax violation and began to communicate his concerns to Jennemann. That only put him on shaky ground with the owner.

Revolving Door

The ex-employee said that THC Designs had gone through three prior Directors of Finance in less than two years and that they all left or were terminated for similar reasons. McKenna is asking for his legal fees to be paid and other damages. The case was filed in the Superior Court for the county of Los Angeles.


Debra BorchardtMay 2, 2022


A judge decided on Friday that a New York case against Acreage Holdings (OTC: ACRHF) can proceed. Judge Andrea Masley in the New York Supreme Court listened to a week-long case and following closing arguments decided that the case against Acreage would not be dismissed. The case is regarding a New York license whose ownership got muddled through a series of mergers and partnerships.

Leading the charge is David Feder, an attorney who is part of a group that is claiming that Acreage Holdings cut them out of a portion of ownership of the converted limited New York cannabis licenses. The lawsuit claimed that Acreage acquired a New York property and this particular investor (EPMMNY) wasn’t included in the sale. A review of the legal document shows that EPMMNY’s equity stake was never finalized and so it wasn’t included in the final application for New York Canna (NY Canna).

Lawsuit Background

When medical marijuana was legalized in the state of New York, only 10 licenses were awarded. EPMMNY was formed in 2015 and the group began partnering up with another group called New Amsterdam Distributors, LLC, which was also seeking a medical cannabis business license. Members of the New Amsterdam group include Dixie, Duval, John Vavalo – a co-owner of a co-owner of J. Michael Shoes –, Dominic Falcone – who owns a plumbing company in Yonkers, and a pharmacist named Patrick Harvey. The complaint names Daino was CEO of Terradiol MC, a shell company for New Amsterdam.

Essentially it was a pairing between a group with money and no cannabis experience with a group that had the experience and needed funding. The New Amsterdam group needed the know-how and agreed to partner with EPMMNY to apply for a license as a combined entity called New York Canna Inc. Feder is a New York attorney with experience in the legal cannabis industry, had been preparing to submit a license application and began assembling a team to operate in New York. Feder began working with Malcolm Morrison, an experienced legal cannabis businessperson, who had successfully obtained cannabis licenses in other states. With this team in place, Feder and Morrison created EPMMNY with barely more than a month remaining to prepare and submit the New York license application.
Feder claims in the lawsuit that the partners agreed EPMMNY would be allocated 25% of the business for preparing the application, New Amsterdam would provide funding and own 75% of the business. However, with the clock ticking for the application to be submitted, Feder wasn’t able to get the documents confirming this arrangement. Although there was correspondence between the parties about the agreement. Despite the lack of documentation for the partnership, the application moved forward and ranked number six for getting one of the 10 licenses. This greatly improved the value of NY Canna.
Feder claims at this point NY  Canna merged with NY Medicinal without its consent and diluted its ownership by 50% to 12.5%. NY Medicinal was owned in whole or in part by Acreage Holding LLC’s predecessor, High Street Capital Partners. On December 1, 2016, Feder responded to the merger notice by rejecting it outright and demanding NY Canna’s books and records. Feder claims that his group was asked to accept the smaller ownership percentage, but they refused.
The license was awarded in 2017 and even with the ownership dispute brewing, Acreage ultimately ended up owning all of NY Canna, also known as Terradiol NY. In 2018, a week before Acreage Holdings went public, the group decided to file a lawsuit. It has been moving through the courts ever since, but now it seems Feder has notched a win at this stage.

Millions At Stake

“It’s a pretrial evidentiary hearing on whether Mr. Feder had the capacity to go with the case, and the judge ruled that he absolutely did,” said attorney Lawrence Lonergan who is representing plaintiff David Feder. “We’re very pleased the court saw things our way.” The case noted that the plaintiffs are also hoping to block Canopy Growth from acquiring Acreage Holdings, which would include the New York portion referred to as NY Canna.
The value of the ownership, should the case tip towards Feder’s claim, is worth millions. He is asking for upwards of $200 million for his stake.

Debra BorchardtFebruary 4, 2019


MedMen Enterprises Inc. (MMNFF) is facing a new lawsuit from the company’s former Chief Financial Officer James Parker. Parker filed his case on January 29 in the Superior Court of California in the County of Los Angeles claiming wrongful termination for an undetermined amount of damages.

MedMen spokesman Daniel Yi said that the company was unable to respond to the filing because it had not been officially served, but would do so once that happened. “These are baseless claims and we’ll defend ourselves vigorously in court,” said Yi.

Parker resigned from the company in November less than a year after the company began trading on the Canadian Securities Exchange following a reverse take over. It’s highly unusual for a company to experience a change at this level so quickly after becoming a publicly traded company. At the time, Jim Miller, who was the Vice President of accounting was appointed as the interim CFO and then in December MedMen named Michael Kramer as its official CFO. Kramer worked previously in senior jobs for retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.

The Allegations

The allegations are harsh. Parker says that he to “Choose between complying with his fiduciary duty to the company and its shareholders or turning a blind eye and a deaf ear to improper and unlawful behavior, he had been constructively and wrongfully terminated without cause and in violation of public policy.” Parker claims MedMen went behind his back to begin searching for a new CFO and diminished his authority within the company.

He also complained that the company instructed him to make payments that he questioned.

“Plaintiff was ordered to spend several millions of company dollars on such items as 24-hour armed Executive Protection (security) for the CEO, President, and their families, high-tech safe rooms and security systems for their new houses, personal drivers, private jets (often with friends and family along for the ride), luxury hotels, special order pearl white Escalades for the CEO (and another car for his family), a custom $160,000 Tesla SUV demanded by the President, tens of thousands of dollars apiece on multiple extravagant custom conference room tables, and placing CEO Bierman’s personal therapist and marriage counselor on staff fulltime as a “performance improvement expert” at a pay rate in excess of $300,000 a year.”

Parker alleges that Bierman and President Andrew Modlin engaged in inappropriate name-calling.

“Mr. Parker was forced to tolerate being ridiculed by CEO Bierman and President Modlin for the way Plaintiff dressed (not hip enough to satisfy the Founders’ millennial culture); being called “fat and sloppy”; being called a “pussy-bitch;” having his office diminished in size; assigned to a shared a parking space with his executive assistant while less senior VP’s and Administrative Assistants had their own exclusive spots; subjected to hearing CEO Bierman’s racially inappropriate reference to Los Angeles City Councilman Herb Wesson as a “midget negro” and the CEO’s characterizations of cannabis social equity programs as “reparations”; CEO Bierman’s references to a representative of the Drug Policy Alliance as a “fat, black lesbian;” CEO Bierman’s and President Modlin referring to women in conflict with them as “cunts” and those with different ideas or perspectives as being “retarded;”

Parker also made serious securities violation claims saying:

  • “Ordering Plaintiff to wire hundreds of thousands of public dollars to a “consultant” in Canada to “buy up our stock when it is under attack”
  • “Ordering Plaintiff to pay prohibited success fees to unlicensed broker-dealers for various fundraising efforts, under the semblance of “consulting agreements”
  • “The CEO and President not being fully transparent about non-arm’s length deals with numerous related parties (including Pharmacann and Captor Capital)”
  • “The CEO and President failing to publicly disclose all Named Executive Officers and other Material Officer compensation packages (in violation of Canadian National Instrument Form 51-102 F6 which requires that the compensation of the CEO, CFO and next three highest-paid executives be publicly disclosed)”

Parker also claims that Bierman and Modlin have continued to treat the company as if it were still a private company and not one owned publicly by shareholders.

“Plaintiff having to deal with all of the resulting cultural fallout at the company; relegated to using his personal American Express card to fund company purchases ranging from $150,000-$250,000 a week because CEO Bierman and President Modlin, and Defendant could not obtain credit cards with high enough limits since MM Enterprises was in the cannabis industry”

MedMen Claims Performance Issues

Within the case, Parker included emails from Andrew Modlin suggesting the company was unhappy with Parker’s performance leading to his ouster.

Modlin wrote, “You have engaged in other serious neglect in the performance of your duties and you have willfully and repeatedly failed and refused to perform your duties. We will be providing you with a more detailed description of your performance deficiencies shortly as well as a plan for curing those deficiencies.”

In another email stated in the case, Modlin wrote, “We are taking the time to thoughtfully memorialize the myriad well-documented deficiencies in your performance so that both you and MedMen can understand what is expected of you in your very well compensated position. Given the amount of your base salary, the annual bonus available to you, and the value of the equity grants given to you, MedMen has every right to expect you to perform your job duties
admirably. ”


Parker was being paid $750,000 a year and if he was terminated without cause he would receive $2.2 million. In addition to other lump sum payments and unvested stock options. However, the filing states that damages would be determined in court.

Other Lawsuits

MedMen is facing another lawsuit. Brent Cox and Omar Mangalji founders of The Inception Companies founders (through an affiliated entity – MMMG-MC, Inc. – that holds a significant stake in MedMen’s management company MMMG, LLC) filed a complaint against Adam Bierman; Andrew Modlin and various MedMen Enterprises (OTC: MMNFF) entities for alleged breaches of fiduciary duty. A Los Angeles Superior Court though denied a request from the plaintiffs for a temporary restraining order and a preliminary injunction and giving the company a slight early victory.

However, similar to Parkers claims that Bierman and Modlin are self-dealing when it comes to the company, Cox and Mangali also stated, “MedMen veneer is a complex web of interconnected subsidiary entities, virtually all of which are directly managed, directed, controlled, and owned by BIERMAN and MODLIN, and all of which always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity. It is that perverse interconnectedness and rampant, brazen self -dealing that renders the actions of BIERMAN and MODLIN, and of the Entity Defendants, unlawful.”


Anne-Marie FischerAugust 8, 2018


There’s something rotten, it seems, in the state of CBD Naturals and its CBD-related claims.

When Jared Berry’s brand CBD Naturals was recently selected as the exclusive distributor of a premier hops/humulus CBD isolate in the United States, he may or may not have expected that he would soon be served with a lawsuit.

The lawsuit comes off the heels of a contentious debate about the origin and trademark rights to extracting CBD from hops (the process trademarked humulus kriya), for which credit is to go to Peak Health Center. The process proves to be promising for CBD medicine as it as a derivative of a legal substance, promising consumers access to CBD in states that have laws against hemp or cannabis CBD.  

Peak Health Center is loudly disputing the claims by Berry and CBD Naturals, which the filed complaint cites as a Vancouver-based business under the publicly traded Isodiol International Inc. (OTC: “ISOLF”), that a signed agreement has allowed him to exclusively sell hops-derived CBD products, with Peak Health Center citing no such agreement in existence.

When contacted for comment, Isodiol International denies any relationship with Jared Berry or CBD Naturals. “Jared Berry is not an officer, director, or fiduciary of Isodiol, Iso LLC, or any of the Isodiol Companies,” says Mike Parmar of Isodiol Investor Relations.  “Therefore, we presently do not have a role in the aforementioned lawsuit or any disputes between those parties.” 

It does seem that Berry was a shareholder at one time according to a press release that stated he sold his shares. In addition to that, he appears in a video with CFN Media in which he identifies himself as the President of Isodiol. Peak Health also provided a Bloomberg company profile snapshot that listed Berry as being on the board of Isodiol. So, Isodiol seems to be distancing itself from Berry and Peak did not include Isodiol on the lawsuit, but there is still a well-documented connection.

Federal and State Offenses

The lawsuit of Peak Health Center vs. CBD Naturals includes several claims, including the federal offenses of trademark infringement, unfair competition, false designation of origin, false representation, false advertising, and violations of California Business & Professional Code and Unfair Competition Law.

Peak Health Center, holder of the trademark for “ImmunAG™”, filed the claims following a press release from CBD Naturals announcing its exclusive distribution rights of hops/humulus CBD isolate.

“We are honored to be selected as the exclusive U.S. distributor and look forward to enhancing our growing product line,” said Jared Berry, who identifies as a member of the board of CBD Naturals, in the June press release that kicked off the lawsuit.

Considered a medical breakthrough for the cannabis industry, CBD Naturals claims their developments have led to products that are the first fully legal CBD products, and prides themselves on being the first company to trademark “CBD”.

According to the complaint documents, the dispute challenges an agreement that was signed between Isodiol and Peak Health Center to distribute ImmunAG™, which did not include any exclusivity rights. Following this agreement, Jared Berry was quoted in press releases saying that Isodiol scientists had developed the kriya product. This was contrary to any agreement signed by Peak Health Center as to the origins of the hops-derived CBD trademark, and the exclusivity of the distribution rights to Isodiol.

“We are not aware of any intellectual properties in which Peak Health claims an interest being unlawfully used or relied upon by Jared Berry or the unknown entity referred to as CBD Naturals,” said Isodiol’s Parmar.

Peak Health Center, in their filing, calls Berry’s words “false and misleading to trade and consumers”.

Medical Marijuana, Inc. is now the company’s only US distributors. According to this article on Seeking Alpha, Medical Marijuana lost several employees to Isodiol so there seems to be quite a bit of bad blood between these two companies.

A Strange Saga Unfolds

Following the press release, Dr. Bomi Joseph, one of the defendants in the lawsuit later filed against Berry and CBD Naturals, reportedly tried to connect with Berry to discuss the use of the kriya trademark. “I thought ‘this must be an understanding, maybe the press got it wrong,” says Dr. Bomi of Peak Health Center. “My friend then sent me Isodiol’s press release with these claims and I tried to get in touch with the company but they went dark. This is what caused me to terminate my contract with them,” he describes of the time after the press release came out.  

“Months later I received the CBD Naturals press release claiming that they were selling ‘CBD from Hops.’ We don’t use the terminology “Hops derived CBD” but it is clearly meant to refer to our product. We also have the trademark for “Kriya” and that trademark was violated by Jared Berry and CBD Naturals. I sent [Jared Berry] a “cease and desist” via email but never heard back. My lawyers tried to contact him several times but to no avail.”

Peak Health Center noted in a press release that “only press releases issued, jointly or singly, by Peak Health should be considered an authentic press release on Hops/Humulus derived CBD.”

“Peak Health has to protect both its trademarks and intellectual property – we hope that both CBD Naturals and Isodiol understands that,” says Bomi, “At this moment we do not have any new extracts planned for trademark but we hope to continue to do plant-based research and find other CBD solutions in the future.”

Isodiol is clear that they are not affiliated with CBD Naturals or Jared Berry: “To the extent, Peak Health has made fact allegations that reference Isodiol, Iso LLC, or any of the Isodiol Companies, there are many factual inaccuracies contained in the complaint.”

“While Isodiol continues to believe there are interesting opportunities concerning hops-derived cannabinoids and other medicinal compounds, such as beta-caryophyllene,” says Parmar, “Isodiol chose to shift its focus away from hops sources because the company believes there are less costly and more readily available opportunities with industrial hemp and cannabis, which are being bolstered by new positive legal developments on a regular basis.”

Where Is Jared Berry?

Recent reports from Peak Health is that Jared Berry remains somewhat enigmatic after being served. One source said he is apparently “hiding out” in an RV outside the CBD Naturals Building. While he will not respond to Peak Health Center, he is reportedly taking meetings and phone calls.

This strange lawsuit saga seems to be a game of “he said, he said, he said”, as the origin of the trademark for kriya is determined and exactly who is involved in the claimed trademark infringement.

William SumnerMay 18, 2018


The cannabis technology company Eaze finds itself in legal jeopardy as a class action lawsuit has been filed alleging that the company violated the Telephone Consumer Protection Act (TCPA) of 1991 by sending out unsolicited marketing text messages en masse various individuals across the country.

Under the TCPA, companies are prohibited from sending unsolicited adverting messages and from making a call or text using automated telephone equipment to contact individuals through any service for which the recipient is charged.

The lawsuit was filed by Farrah Williams and reported in MJ Biz Daily, who alleges that between September 2017 through the present she received dozens of unsolicited texts messages from Eaze. Williams, who works nights at a nursing home, claims that the continuous messages sent by Eaze throughout the day would wake her up and prevent her from going back to sleep; causing her to become irritable and distracted.

Williams’ suit claims that Eaze contacted her through the use of an autodialer and that the same had happened to countless others. To bolster this claim, Williams provided text messages from Eaze as well as social media posts made by individuals making the same allegations.

“@Eaze_Team @Handstack received an unsolicited text message from you guys. how do you have my number???” reads one tweet posted on June 17, 2017.

“What company is idiotic enough to use unsolicited SMS as a marketing scheme? @Eaze_Team is going to get sued out of existence,” reads another.

Although it is possible to opt-out of receiving text messages from Eaze by replying with the word “Stop,” Williams claims that she was not made aware of this option in the message.

The case goes into great detail about the money that Eaze has raised and suggests that the money was raised off the tremendous growth that Eaze was experiencing, but that the success was achieved through “growth hacking.” The suit claims, “The reality is that Defendant “growth hacked” its way to the top of the pot delivery business – specifically, by relentlessly bombarding existing and prospective customers with text messages and other digital spam, day after day, en masse, without anyone’s permission, precisely as experienced by Plaintiff here.” The case claims the growth hacking was at the expense of people’s privacy.

It went on to state, “The inconvenient truth, however, is that Defendant’s exponential growth is not attributable to the quality of the product it delivers or the convenience of the service it provides – after all, the product is not even grown by Defendant, and Defendant is hardly the first drug dealer to deliver.”


The case also mentions the technology provided by (among other agents or affiliates) a company called Bitesize, which was founded
and is operated by an individual named Jessica Lee. Bitesize’s text messaging technology “helps companies,” including Defendant, “drive sales with interactive text message[s],” which Bitesize sends on the companies’ behalf in “bulk.”  The case goes on to say, “The
founder and CEO of Bitesize, Jessica Lee, personally responded to the complaint by assuring the individual that Defendant’s text message program is “completely CAN-SPAM compliant.”

The lawsuit says that the text messages at issue, in this case, were sent by Bitesize on behalf of Defendant with the wrong regulatory scheme in mind.


As restitution Williams is seeking an injunction prohibiting Eaze from committing any further violation of the TCPA, $2000 for herself and each member of the lawsuit for each and every text message that violated the TCPA, and payment of attorneys’ fees and costs.

If found guilty of violating the TCPA, and if more join the class action lawsuit, the cost of paying Williams and the other plaintiffs could potential bankrupt Eaze.

As outlined by the lawsuit, the outcome of the case will hinge on five important questions:

  • Did Eaze or its agents transmit marketing/advertising messages to the plaintiffs?
  • Was Eaze using an automatic dialer to transmit the messages?
  • Can Eaze demonstrate that it had expressed written consent to send the messages?
  • Was Eaze’s conduct knowing or willful?
  • Should Eaze be prevented from performing such actions again?

So far Eaze has not made any public comment on the case and has proffered no rebuttal to any of the claims the suit makes. As the lawsuit is still in its infancy, it could be months or even years before the case reaches a definitive conclusion.

One cannabis industry expert that preferred to not be identified said the suit didn’t pass the smell test for them. “It’s either a class-action grab by the lawyer or someone out to get Eaze,” they said. “It just seemed odd. You can’t text stop, but you can file a lawsuit?”

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