Trouble seems to follow Glenn Martin and publicly traded securities. Martin, who often sprinkles in references to the Lord in conversation, is currently CEO of cannabis company Weed Inc. (BUDZ) but was previously the subject of a securities complaint by 200 shareholders of his previous company United Mines. He is now facing a new complaint by Travis Nelson, a former employee, and shareholder of Weed.
Weed is a cannabis company based in Arizona and is operated by Martin, his daughter Nicole Breen and her husband Ryan Breen. The company says it is focused on the development and application of cannabis-derived compounds for the treatment of human disease. Its wholly-owned subsidiary, Sangre AT, LLC has begun a planned five-year genomic study to complete a genetic blueprint of the Cannabis plant genus, by creating a global genomic classification of the entire plant. Sangre is operated by Dr. Pat and Mary Williams.
Nelson filed a lawsuit in February against Weed Inc., Martin, Sangre Agrotech and Dr. Williams alleging that Martin reneged on an agreed upon position with the company. The suit claims that he was promised 50,000 shares and a five-year contract at $120,000 a year. Current company filings show Nelson as owning 50,000 shares.
Illegal Transportation Accusations
Nelson had worked from Sangre Agrotech during the time it was acquired by Martin’s company Weed. Nelson became concerned that Martin was not following the laws for legal cannabis and stated his concern for what he suspected was an interstate movement of cannabis. Nelson produced an email that suggests that cannabis seeds improperly crossed state lines.
“I was fired for bringing up my concerns over the seeds crossing state lines and expressing my desire to operate within the law,” said Nelson. Nelson says he doesn’t claim to be a choir boy, but that he was very insistent that laws be followed to be in the cannabis industry.
This accusation of illegal transporting of a product has been leveled at Martin before. Martin was accused in his previous company United Mines of illegally transporting cyanide over state lines. The lawsuit claims, “Defendant Glenn Martin transported more than 3,000 pounds of cyanide across sixty (60) miles through commercial and residential areas without authority and without a permit. For the record, Defendant Glenn E. Martin has a prior felony conviction for conspiracy to possess cocaine with intent to distribute and related felony drug offenses.” Cyanide is a deadly Class 6 poison that Martin supposedly hauled through the state in a U-haul truck. Nelson’s accusation of transporting cannabis seeds across state lines would be the second time Martin has been called out by shareholders for illegally moving product.
Insider Trading Accusations
The lawsuit also claims that Martin made substantial gains on insider trading of Weed Inc. stock. Nelson says he told Martin that he was concerned that the stock trading activity appeared to be insider trading. The Weed Inc. stock traded in the range of $1 during most of 2017 and then moved to $2.80 at the end of December 2017. Then in the first week of January, it shot up to $14.45 for a gain of over 1,000% on no news.
Martin’s response regarding Nelson’s accusation of the unusual trading was, “The Lord was behind it.” Martin did concede that the SEC (Securities & Exchange Commission) had questioned him about the trading activity, but the SEC wouldn’t discuss Mr. Martin or any investigations regarding him. “It was pure organic growth,” he claims. He also claims Weed Inc. was the first cannabis company with a billion dollar market cap, yet it has no revenue. “There’s never been any insider trading,” he said. Martin, his daughter Nicole Breen and her husband Ryan Breen own 80% of the company stock.
Martin also claims he doesn’t know Nelson and never met him, yet Nelson was able to quickly produce emails and messages exchanged between the two as well as documents where both parties signed on the same date.
United Mine shareholders also accused Martin of insider trading. In that lawsuit, shareholders claimed, “In addition to illegal stock sales and the money laundering scheme, Defendants Martin and Breen have illegally inflated the price of the stock of the United Mines through friends they asked to purchase stock at a price higher than market value, thereby increasing the value of their own stock holdings. This scheme was also designed to attract legitimate third-party investors.”
The case from the United Mines shareholders which Martin described as a hostile takeover was settled in 2014 resulting in Martin recovering the company. The lawyer in the case did not respond to a request for comment and the other terms of the settlement weren’t clear.
Bizarre Behavior
Another former employee had an even more bizarre tale, although she hasn’t filed a lawsuit, is Amanda Gross, who owns 30,000 shares. Gross was coming onto the project as a Master Grower and was associated with the Williams of Sangre Agrotech. She was going to test the clones from Dr. Williams and put the strains through a rigorous testing cycle. “The idea was to create genetically superior marijuana,“ she said.
The first sign of trouble was the company’s decision to purchase an active fundamentalist church to repurpose as a cultivation facility. She said it caused a lot of acrimony in the La Veta, CO community and felt it was a poor decision.
Then, at her very first board meeting, Gross said Martin behaved in such an unprofessional manner that she called him out for his behavior during the meeting. Gross says she still has seven pages of copious notes from the meeting. “It was so disturbing I knew I had to document it,” she said.
Gross said that Martin asked about her sex life, questioned her ability as a mother and asked whether she ‘loved the plant.’ Gross is not a cannabis consumer. She said he began yelling during the meeting when she called out his unprofessionalism. She said to everyone in the meeting he had basically broken every sexual harassment law on the books, to which he said, “I love the Lord. I’m a Christian. I have not been with a woman.” Saying his celibacy was none of her business.
Despite the bizarre behavior, Gross said that the Williams of Sangre Agrotech convinced her to stay but in the second meeting with Glenn Martin the bizarre behavior began again and she decided to quit. “He’s a horrible manager of his mouth. He’s a misogynist,” she said, “I have considered moving forward with legal action.”
She’d like to sell her shares but is unable to because the company won’t release them. “I can’t sell my stock until Glenn adheres to all the SEC requirements,” said Gross. She said she contacted Mary Williams at Sangre to ask about Martin completing his SEC requirements and hasn’t gotten an answer. Gross is now working with cannabis grower Jamal Hackler.
Martin says he doesn’t remember the meeting the way Gross describes it and suggested that people tell falsehoods. Mary Williams at Sangre Agrotech is one of the few people that were also at the meeting but did not return requests for comment. The Williams recently provided the company with a loan to acquire a condominium in La Vela CO.
Additional Lawsuit
In the company’s latest S-1 filing there is another lawsuit filed by William Martin, whom Glenn Martin says is no relation. William Martin is suing for breach of contract where he provided services in exchange for company shares that weren’t delivered. This suit involved a request for a temporary restraining order that was denied.
Connections To Medical Marijuana
D. Stuart Titus, CEO and President of Medical Marijuana (MJNA) was a United Mines shareholder and is now a Weed Inc. shareholder according to Martin. Dr. Titus didn’t respond to a request for comment. “He put in a quarter of a million dollars in United Mines in 2009. I know Stuart well, but to me, he was just a front for Michael Llamas.” Michael Llamas died in a car accident in 2017, but was investigated for various real estate scams and was facing lawsuits associated with MJNA before leaving the company. Other than being a shareholder in Weed Inc., there doesn’t seem to be any other connection between the two companies.
Big Losses, No Revenue
Similar to United Mines, Weed Inc. has extraordinary losses and little revenue to show. In the case of United Mines, the shareholders complained no precious metals were ever mined. In the situation with Weed, no cannabis revenue has been produced. There has been zero revenue for 2016 or 2017, while the company has reported a net loss of $4.1 million. the losses are attributed to the company paying for professional fees and administrative costs.
Investors should pay close attention to the filings with the SEC on companies that report big losses and issue shares for payment for services. A company facing numerous lawsuits from shareholders should give investors a moment of pause.
StaffApril 25, 2018
Debra Borchardt
