Parallel Archives - Green Market Report

StaffJune 30, 2022


Editors Note: This was republished with permission from Crain Chicago and written by John Pletz.

The owner of Windy City Cannabis shops wants Beau Wrigley to pay $80 million in damages for a sale that never closed.

William “Beau” Wrigley Jr., who is already facing lawsuits over dreams of a marijuana company’s initial public offering that went up in smoke, is fighting a request for arbitration in a deal to buy a half-dozen Chicago-area pot shops that also vaporized.

Wrigley, who resigned last year as CEO of Atlanta-based marijuana company Parallel, filed suit in federal court in Chicago this week, asking a judge to declare that he shouldn’t be included in arbitration over the failed deal by Parallel to buy six Windy City Cannabis stores for $100 million. (Read the lawsuit below.)

The deal has been in limbo for more than a year. Since then, the market for cannabis stocks has cratered, pushing down the value of marijuana businesses. The state also has held lotteries to issue 185 new dispensary licenses, further undercutting the value of marijuana shops.

Parallel reached a deal in April 2021 to buy Windy City Cannabis shops, which were owned by Steve Weisman and Weisman Holding. It was one of several deals that were supposed to culminate in the IPO of Parallel later that year through a merger with a special-purpose acquisition company, or SPAC, called Ceres Acquisition (OTC: CERAF).

The SPAC deal fell apart and Wrigley later resigned as CEO and chairman of Parallel amid a cash crunch. Investors in Parallel have sued in Florida and New York, saying they were misled about the financial health of the company.

Windy City Cannabis is not the first marijuana deal to blow up, underscoring the Wild West nature of a nascent, fast-moving industry where entrepreneurs have both made and lost fortunes.

PharmaCann, one of the four big multistate marijuana companies based in Chicago, planned to sell to MedMen for $682 million in 2018, but the deal fell apart. Verano Holdings’ deal in 2019 to sell to Phoenix-based Harvest Health & Recreation for $850 million also came undone.

Verano later went public, but PharmaCann has struggled to keep up with Chicago-based peers, such as Green Thumb Industries and Cresco Labs, which are among the largest players in the industry.

Several smaller players have been sold for tens of millions of dollars in the past year.

Windy City was an even bigger prize. After two waves of consolidation, Windy City is one of the few remaining companies in Illinois with multiple licenses that could give an acquirer the ability to enter the Illinois market with enough scale to compete with Cresco, GTI, Verano and others who hold the maximum 10 retail licenses allowed by law.

But Windy City’s deal, which was supposed to close by April, remains up in the air. Parallel hasn’t come up with the money to complete the deal, nor has it been able to get approval from state regulators to transfer the retail licenses.

One of the challenges, according to a related lawsuit filed in Cook County Circuit Court by Weisman, is the ownership by Wrigley, who was CEO of Chicago-based Wm. Wrigley Jr. until its 2008 sale to Mars for $23 billion, then moved to Florida and got into the pot business in 2017. Although he’s no longer CEO, he’s the largest shareholder in Parallel, according to the litigation. However, the ownership stake involves at least one trust, something that’s prohibited by state regulations.

Wrigley, who was the subject of a Forbes profile just two months before announcing the Windy City deal, was the face of the company until November, when he resigned as CEO.

Now he’s trying to distance himself. In the federal court filing, Wrigley says he was not a party or signatory to the purchase agreement for the Windy City stores and did not act as an agent to Parallel or a related company. According to his filing, Windy City attempted to include him in the arbitration in which it’s seeking $80 million, alleging Parallel and its parent company SH Holdings are the “alter ego of Wrigley such that he should be personally liable for any damages.”

This story has been updated to correct the court where Beau Wrigley filed suit to federal court, not Cook County Circuit Court.


Debra BorchardtMay 12, 2022


 Talladega wants out of the Parallel cannabis lawsuit. This is the lawsuit that disgruntled Surterra Wellness (now known as Parallel) investors filed against the company’s leader beau Wrigley and Surterra Holdings, along with a family office and Talladega LP and Talladega Inc. The company filed a motion earlier this week to dismiss its involvement and outlined why it should not be a part of the lawsuit. Talladega was not initially named in the case, instead, it was Canadian hedge fund SAF Group, but they were replaced by Talladega. 

At issue is a bridge loan that Talladega extended to Surterra/Parallel. The lender, who owns the Junior Notes says it was a purely selfish move to keep the company operational in order to protect the health of those junior notes. 

Not In New York

First, Talladega says it shouldn’t be included in a New York lawsuit since it isn’t located in the state. The company is based in Canada and says that alone should be grounds for getting itself dismissed from the case. 

Bridge Over Troubled Water

Next Talladega says it only provided a bridge loan that kept Parallel operating and didn’t really classify as debt that would breach the covenants of the other debt instruments. In the motion Talladega says, “Beginning in June 2021, shortly after Talladega and the company entered into the Talladega Credit Agreement, the company began to experience financial stress and defaulted under both the Note Purchase Agreement and the Talladega Credit Agreement. On December 16, 2021, Talladega issued a notice of default to the company listing 11 defaults or events of defaults under the Talladega Credit Agreement. Following issuance of the notice of default, the company, PE Fund, and Talladega entered into discussions to provide financing to the company to allow it to “bridge” the gap until the Company could be sold to one or more third-parties, or recapitalized.”

Talladega says the unhappy investors waited until 10 days after the bridge loan to file the lawsuit. The investors claimed that Talladega completed the bridge loan in order to earn more fees and jump to the head of the capital line. Talladega says it was just trying to protect itself from Parallel going under. The company wanted to give Parallel a chance to find a buyer or get more financing. The fee amounts in the bridge loan documents are redacted. 

The investors also complained that Talladega was an insider, but again the company says that is wrong. The filing stated, “Beyond Talladega’s participation in the Talladega Credit Agreement and the Bridge Credit Agreement, Talladega has no close relationship with the Company that would give it any sort of control over the Company or the Company’s actions.”

The investors believe Talladega knew more than it is saying because it was the Administrative Agent and Collateral Agent for the Junior Note holders for Parallel. The original complaint stated, “The Junior Lien Notice informed the Company that it had failed to (i) maintain the required debt-service-coverage ratio; (ii) maintain specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021. 99. The Junior Lien Notice also explained that the Company had defaulted on the Junior Note through its “incurrence of Indebtedness pursuant to that certain Negotiable Subordinated Promissory Note dated June 30, 2021”—i.e., the PE Fund Note.” However, Talladega sending out the default notice didn’t make it an insider. 

In Closing

Since Parallel is a private company, there is little information as to the health of the company. Within the state of Florida, where the company mainly operates it is number five on the list of top license holders with 46 licenses according to Cannabiz Media. Trulieve leads with 121 licenses, followed by Curaleaf with 50, then Verano at 48, and Ayr Wellness with 47 licenses. However, none of the companies break out their revenues from Florida, so it’s difficult to determine how much revenue is coming into the company.

Debra BorchardtApril 6, 2022


The debt troubles facing Parallel are exposing the risk to other companies. Innovative Industrial Properties (NYSE: IIPR) gets 10% of its revenues from Parallel and Sundial’s (OTC: SNDL) joint venture with SAF Group called Sunstream Bancorp owns some defaulted debt. 

In March 2021, Sundial Growers Inc. formed a  50/50 joint venture with SAF Opportunities LP, a member of the SAF Group called SunStream Bancorp Inc. The Joint Venture’s first mandate was the formation of a special opportunities fund with commitments from third-party limited partners alongside an initial commitment from Sundial of $100 million. 

Sunstream is the owner of $145 million of Junior notes owned by Parallel Cannabis and those notes are in default – exposing Sundial to the loss. According to the lawsuit filed by disgruntled investors, the notes were purchased shortly after the joint venture was formed and was likely the venture’s first investment or one of the first investments. The notes were purchased on May 7, 2021. The lawsuit actually attributes the purchase to SAF Group, but Sunstream’s spokesperson did confirm that it was Sunstream that owned the debt, not SAF Group. 

Parallel used the Junior Note to refinance seller financing provided by the sellers of New England Treatment Access (“NETA”). NETA is a cannabis facility that Parallel acquired in 2019. The Junior Note carries an annual non-default interest rate of 14.25%. Sunstream may have felt some comfort in the language of the Junior Note that stated Parallel couldn’t incur any more debt, but the company is alleged to have done just that. 

According to the court filing, “On December 16, 2021, Parallel received an even more alarming default notice—this time for the Junior Note—in the form of a Notice of Default, Election of Default Rate and Reservation of Rights to the Company (the “Junior Lien Notice”) from Talladega LP, the Administrative Agent and Collateral Agent for the Junior Note holders. The Junior Lien Notice informed the Company that it had failed to (i) maintain the required debt-service-coverage ratio; (ii) maintain specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021.”

Sunstream’s Silence On Parallel

Sunstream has made a big deal out of most of its investments. It has lent money to Jushi (OTC: JUSHF) and the SPAC Greenrose Acquisition Corp. Michigan-based Skymint also got financing from the joint venture. However, one would be hard-pressed to find any mention of the $145 million investment in Parallel. Despite the numerous press releases crowing about these deals and more, there is little information about the purchase of the notes from Sunstream or Sundial. 

Sunstream has also let it be known it was planning to go public. Sunstream IVXX Investment Corp. announced that it has submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission for a proposed initial public offering of its common stock. Could a dud investment affect that IPO?

Sundial’s investors

In July 2021, Sundial increased its commitment to SunStream Bancorp Inc. to $538 million from its previously announced commitment of $188 million. In October 2021, Sundial reported it was buying the common shares of Alcanna Inc., and after extending the closing date, completed the transaction at the end of March. The valuation fell from an all-stock deal valued at $346 million to and combination of cash and stock valued at $320 million. So, it seems as if it’s business as usual at Sundial. However, analysts covering Sundial will no doubt want to know if the effects of this default will bleed into Sundial’s books.

Debra BorchardtApril 5, 2022


The disgruntled investor lawsuit against Parallel cannabis initially hit the public records as a heavily redacted document. The Judge in the case apparently denied the redaction request and Green Market Report got a look at the complaint in all its glory or gory detail.

Notably, the actual debt amounts are spelled out along with other details that weren’t gleaned from the previous review. There are several issues alleged in this lawsuit and it is broken down as such:

  • The SAFE (Simple Agreement for Future Equity) Investors claim their $25 million investment wasn’t supposed to be released until $50 million was raised. Their money was inappropriately taken from escrow 
  • Former CEO Beau Wrigley increased the company debt to $300 million
  • Parallel reduced its revenue projections by 40% in a matter of months
  • Parallel was in default on its debts but did not tell potential investors.
  • The defaults were triggered by money owed to the former founder Jake Bergmann
  • Green Health debt was created inappropriately to pay Bergmann
  • Wrigley was conflicted between issuing debt and making sure repayment terms were overly generous
  • Investors allege that the Ceres SPAC Investment may have been a ruse all along to convince the SAFE investors to commit

SAFE Investors

The SAFE investors say they agreed to invest $25 million if another $25 million was raised bringing the total to $50 million. They say they wanted Wrigley to put up some money to have “skin in the game.” They say their money was in escrow and not to be released until the whole $50 million was raised, but that didn’t occur. They were also told that the investment would be a bridge funding until the SPAC deal was closed or alternative funding was accessed and that their money would likely be tied up until the second quarter of 2022. The money was released on September 27, 2021 even though the full $50 million wasn’t raised. The investors though found out that Wrigley didn’t put up his money after the fact and complained.

Wrigley is alleged to have then made up a shortfall of $10 million, but then had his own family fund called the PE Fund pay him back $3 million. The court filing says, “The Company had quietly used $3 million of the SAFE money to pay back part of Wrigley’s PE Fund Note, which means that while Wrigley was out soliciting “bridge” financing, he was actually taking $3 million out of the Company.”

Big Debt

One of the details that had been redacted in the original documents was the amount of debt at Parallel. The unredacted version states that Parallel had $300 million in debt. “By the end of June 2021, as discussed above, the Company had incurred more than $350 million in debt, a portion of which—the PE Fund Note—constituted an undisclosed default under $300 million of its Senior and Junior Note.”

  • The Senior notes account for $165 million with 10% interest. 
  • The Junior notes are $145 million and are owned by the SAF Group in Canada. The company used the Junior Note to refinance seller financing provided by the sellers of New England Treatment Access (“NETA”). NETA is a cannabis facility that Parallel acquired in 2019. The Junior Note carries an annual non-default interest rate of 14.25%
  • The company also appears to owe approximately $54 million on $44.3 million of certain convertible secured notes issued to Green Health. The Green Health Notes accrue interest at a rate of 16% per year, and carried a prepayment penalty of 25%

Rosy Revenue Projections

The investors also allege that in August 2021, Parallel projected 2022 revenue of $618 million. However, by January 2022 those revenue projections had dropped by 40% to $362 million. The company is privately owned and so actual revenue figures can’t be obtained. 

Debt Defaults

The case alleges that by September 2021, Parallel “was on the precipice of (i) covenant and payment defaults on $145 million of recently issued junior debt, (ii) cross-defaults on $165 million of senior debt, and (iii) defaulting on a $13.5 million promissory note issued by Wrigley’s “family office,” Defendant PE Fund (PE Fund also held $91.2 million of the Company’s $165 million in senior debt); b. That as of September 27, 2021, the company also was already in payment default on approximately $44 million of notes issued by Defendant Green Health – a different Wrigley family office”

The complaint says that Parallel actually began defaulting on the debt as early as June 2021 because the company began issuing new debt to pay its other obligations. The investors say that their debt agreements specifically stated that Parallel couldn’t incur any more debt, but did so anyway. Essentially raising more money to pay off the previous debts due, which is why the complaint called Parallel a Ponzi scheme. 

Bergmann Payments

Bergmann was the original founder of the company but he stepped down in 2018 when Wrigley became the CEO. The complaint says, “A dispute between Bergmann and the company arose over the value of Bergmann’s common stock. To resolve the dispute, and disregarding that Bergmann’s interests should have been junior to all of the company’s debt and Preferred Stock obligations described herein, the company entered into the Bergmann Settlement in or around January 2021.” Parallel (Surterra at the time) agreed to pay Bergmann $38.5 million and the first payment was to be $6 million. The second payment was to be $12.5 million and if Parallel couldn’t make that payment – it would rise to $13.5 million. 

The investors say Parallel didn’t have the money and created more debt called the Green Health note to pay off Bergmann. The investors also say they were never told about the money owed Bergmann when they made their investment. Bergmann was paid $16 million in June 2021, but it didn’t come from Parallel – instead, it came from the Green Health debt which got money from the PE Fund.

Green Health Notes

Green Health is another Wrigley family office. The investors say the Green Health debt was created in order to pay off Bergmann and that was not allowed because the existing note holders agreed to lend money to Parallel if the company incurred no more debt. “The Company also appears to owe approximately $54 million on $44.3 million of certain convertible secured notes issued to Green Health. The Green Health Notes accrue interest at a rate of 16% per year, and carried a prepayment penalty of 25% (inclusive of all interest) had they been repaid before the May 1, 2021 maturity date.” Wrigley was CEO of Parallel and Green Health at the same time. 

The Green Health Notes convert into preferred equity of Parallel to the tune of $135 million worth of preferred stock that would outrank one of the disgruntled investors – Techview’s Series D Preferred stock. So, the $44.5 million investment from Wrigley’s family office would turn into $135 million of stock. 

“Remarkably, the fact that the Third and Fourth Amended Green Health Notes were executed as of May 7, 2021, with a past-due maturity date of May 1, 2021, means the notes were already in default upon execution.

Ceres Acquisition SPAC

Parallel was rumored to be going public as the qualifying transaction for the Ceres Acquisition SPAC (OTC: CERAF). However, the deal fell apart and was terminated. The valuation fell from $1.8 billion to $1 billion and the lawsuit alleges that Parallel’s poor performance as a company would have resulted in a loss of value in the public share. The investors also allege that maybe the SPAC deal was never intended to go forward and was just a marketing tool. 

When the SPAC deal was terminated, Parallel spun the news as a positive story. The company alluded to more investors coming forward and that it had just received new private investor money, which was the SAFE money. 

Parallel Crashes

The problems all came to a head according to the complaint when in November 2021, Wrigley resigned as CEO when the first default notices started going out. At the beginning of December, it became really clear to the investors just how bad the situation was. “During a Zoom call that day with Perella Weinberg Partners (“PWP”)—one of the company’s financial advisors in connection with the purported effort to sell the company—PWP disclosed that the year-end interest payment due on the $165 million in Senior Notes would not be paid, because the company would instead need to conserve precious cash for the sale process.”  

The investors had been told their cash would last the company until at least the second quarter of 2022, but it may have already been used up by the fall of 2021. The investor’s group financial advisor Trip McCoy had eventually asked the current CEO James Whitcomb where the money went, “Whitcomb attempted to deflect the issue to PWP’s supposed mishandling of the situation, but also conceded that although “we still have most of that money today” “[t]he issue is we need to raise more, and the [newly appointed strategic advisory] committee is focused a lot on unwinding of some of Beau’s securities and redistribution of this equity back to the rest of the cap table.” Whitcomb further conceded in the same message exchange that “Beau and Jay have some explaining to do to you as I mentioned in our last call.”

Debra BorchardtMarch 28, 2022


The latest documents in the privately-owned Parallel Cannabis (formerly Surterra Wellness) lawsuit lay bare the issues surrounding the company’s debt and its inability to pay those debts causing defaults.

The court documents filed on Friday outline a plan by Parallel’s then CEO Beau Wrigley and his family fund called the PE Fund to create a new level of debt that would jump ahead of the Senior debt holders (some of whom are filing the lawsuit). That money would then pay the debt owed and avoid default. However, there were many problems with the plan and those issues are outlined in the latest complaint. 

To set the stage, investors that buy debt in a company are also ranked in order of priority in case the company runs into trouble. In the case of Parallel, Senior noteholders come first, followed by Junior noteholders – there are no common shareholders since the company is still private. Had it become a public company those shareholders would be the last in the line to collect any money.

Super Senior Debt

The investors in the case, John and Ultima Morgan, TGHI II LLC, Prime Overseas Investments and Enterprises Ltd., and Techview Investments Ltd. complain that in 2021 while Wrigley was preparing the company to go public with a Special Purpose Acquisition Corp. called Ceres Acquisition Corp., it was actually having trouble paying its debts. The complaint says, “Wrigley did not wish to reveal that the Company had missed its projections so badly that it could not pay a debt Wrigley had just secretly negotiated a few months earlier. This need for secrecy was exacerbated because Wrigley was simultaneously planning to refinance [redacted] of other debt, all the while trying to close a SPAC transaction so he could access the public markets to cash out his controlling stock interest.”

The investors claim that Wrigley wanted to create a new tranche of Super Senior Notes to be senior to their first-lien Senior Notes. The same collateral backing their investment would now be used to back the new debt. The investors say they didn’t give their approval to be pushed back down the line of repayments and that their approval was required. They also say that the Collateral Documents would need to be changed and that the current debt holders have covenants that state no more debt can be incurred. Essentially saying the company couldn’t create the Super Senior debt. 

While the amount of debt that Parallel was saddled with is consistently redacted, there are a couple of footnotes that show “$18 million was owed to the former owner (R. Jake) Bergmann as part of a confidential settlement the company could not afford. There may also be up to $107 million of consideration owed for the company’s acquisition of a company known as Windy City.” The complaint also says that Parallel borrowed money from the PE Fund in June 2021 to pay off Bergmann. 

In 2019, Surterra did say it had raised $300 million in private capital, and last year Forbes reported that the company had $348 million in debt. 

Junior Note Default

The case states that Parallel failed to make its payments for the Junior debt in September 2021. The investors say they weren’t notified of the default within the required five days. They suggest they didn’t learn of the situation until a call on November 15, 2021, and that PE Fund claimed to have also just learned of the default in that call. However, the complaint alleges that the machinations by PE Fund during the summer (when it tried to create the Super Senior debt) showed that it knew it was in trouble which was why it was trying to create new sources of debt. The case alleges eight defaults occurred during Wrigley’s tenure at the company, including the default caused by PE Fund in the June 2021 Transaction. Wrigley resigned shortly after the November call. 

GH Notes

In addition to the hoped-for Super Senior Notes, Parallel issued a series of convertible promissory notes (the “GH Notes”) between January and May of 2021 to a Wrigley-controlled investment vehicle—Green Health Endeavors. The investors say the company did not conduct any arm’s length negotiation for the financing terms of the GH Notes, nor did the company explore any other financing options available. “Furthermore, upon information and belief, the GH Notes were issued in January 2021 but were not approved by the disinterested directors and shareholders.” The complaint went on to say, “Wrigley’s own employee, James “Jay” Holmes, negotiated the terms of the GH Notes on behalf of Green Health Endeavors while simultaneously sitting on the board and serving as an officer of the Company, in both roles reporting directly to Wrigley as his boss.” The investors also allege that the GH Notes should never have been issued because it violated the agreement to the original noteholders that the company wouldn’t incur any more debt.

The Scheme

In sum, if the company went under, the holders of the Super Senior Notes would have pushed the other lenders out of the way and been able to take over the company. “In that sense, the Scheme is a paradigmatic “loan-to-own” scheme developed by a corporate insider—who is not only the largest existing secured creditor, but also the controlling shareholder—to take the Company at a fire sale, while leaving all innocent third parties holding the bag without any recourse.” 

Parallel’s Licenses

Despite the inability to pay its debt or close the SPAC transaction to go public, the company continues to operate in several states. Even though some of this information is redacted in the court documents, according to Cannabiz Media, Surterra/Parallel has 44 active licenses in Florida, three licenses in Pennsylvania under the Goodblend name, and one Goodblend license in Texas. It has 11 active licenses under the NETA (New England Treatment Access)  name in Massachusetts. It has nine active licenses in Nevada under the names Parallel Brands, Cookies and D.H. Aldebaran. 

Nine license applications in Pennsylvania were denied, along with one denial in New Jersey and two denials in Georgia.

Illinois Deal Is Off

Curaleaf (OTC: CURLF) agreed to buy Grassroots in Illinois and along with that deal, the company noted three Illinois medical dispensary licenses and six adult-use dispensary licenses owned by former affiliates of Grassroots (the “Illinois Assets”) were sold to Parallel in April 2021. The transaction though is subject to regulatory approval, which it doesn’t appear to have received. In a securities filing by Curaleaf, it wrote “Under the terms of the transaction, the purchase price for the Illinois asset consists of a $100,000 base price to be paid $60,000 in cash and $40,000 in Parallel stock, plus earnouts of up to an additional $55,000 payable through 2023. The Company has received from Parallel a $10,000 deposit, which is refundable under limited circumstances and will be applied to the base purchase price for the Illinois Assets at closing.”

On February 25, 2022, Curaleaf wrote in its annual report that it had “received correspondence from Parallel’s attorneys indicating that it will not be in a position to complete the acquisition of the Illinois Assets due to lack of financing and seeking to terminate its agreement to purchase the Illinois Assets. The Company has asserted that Parallel’s actions have constituted material breaches of its agreement with Parallel and is exploring its options.”

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