There is clearly no love lost between iAnthus (OTC: ITHUF) and Beth Stavola’s MPX NJ. Last week, MPX NJ sued the troubled iAnthus Capital Management and its New Jersey subsidiary. MPX is saying that iAnthus is improperly going after the operation of the Pleasantville Alternative Treatment Center by trying to negotiate with regulators. On Wednesday the judge ruled against iAnthus according to a story on NJ.com.
The story said that in a remote hearing, Judge Joseph Quinn issued an initial order that said iAnthus could not represent itself as MPX NJ without disclosing the pending agreement before the health department or enter into contracts that bind MPX. “iAnthus must also inform Stavola of all contracts and construction at the Pleasantville cultivation site, and avoid additional unauthorized construction in parts of the facility where marijuana is being grown,” said the report.
“It certainly is our intention to work something out here,” Paul Josephson, an attorney representing iAnthus, said during the remote hearing. “I don’t think there’s anybody on either side who wants to jeopardize this permit. I think and I hope that’s a shared goal of the parties.”
The two companies have a shared lease for the dispensary, but MPX NJ is insisting that it is the company that was awarded the permit in 2018 and that the master services agreement that iAnthus cites as its authority, has not been approved by the New Jersey State of Health. Stavola sold her original cannabis assets to MPX Bioceuticals and then proceeded to build that company to become an attractive property, which iAnthus acquired. She was the founder and CEO of Stavola Medical Marijuana Holdings, Health for Life Inc, GreenMart of Nevada, and CBD For Life.
According to the New Jersey Globe, the suit stated, “These actions cannot stand, as they threaten MPX NJ’s ATC permit, expose it to liability from third parties, and tarnish its reputation, as well as that of its owners, across the cannabis industry.” The lawsuit had asked the judge, Monmouth County Superior Court Judge Joseph Quinn, to keep iAnthus from acting on behalf of MPX and declare MPX NJ as the owner of the dispensary rule that the master services agreement is no good until it is approved by the New Jersey Department of Health.
The Globe said that the filing alleges further wrongdoing by iAnthus. Stavola, a former executive at the marijuana industry giant, left the firm and its subsidiaries in August, the suit says. But in September, iAnthus told regulators in Nevada she was still CEO of GreenMart of Nevada and iAnthus subsidiary.
iAnthus problems began in April when Chief Executive Officer Hadley Ford has resigned from his position after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow was appointed as the interim CEO effective immediately.
The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action. According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans with iAnthus’ senior secured lender, Gotham Green Partners (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way.
In August, the company reported a staggering net loss of $237.3 million, which included a $199.4 million impairment loss. While the revenue rose 12% sequentially to $30.4 million, the net losses and defaulting on debt payments have overshadowed any good news. At this point, the credit Gotham Green Partners (GGP) demanded its debt payments or it was taking over the company and leaving the common shareholders with very little. August was also the month that Stavola resigned from the company.