We always joke that time moves quickly in the cannabis industry. One year in cannabis is equal to five years in any other industry.
It also feels like the cannabis industry, unlike more mature industries, has its fair share of scandals. So Green Market Report took a look at the past 12 months and came up with the top five scandals in the cannabis industry for 2022.
This story started nicely enough. MedMen needed some money and decided to sell its New York assets to Ascend Wellness. A price was agreed upon, though it seemed a little low considering how promising the New York market looked at the beginning of 2022.
Then the top management at MedMen changed, and they too thought the price was a bit cheap and tried to back out of the deal. After court battles that included accusations of political pandering, Ascend won.
But the victory dance didn’t last long. Ascend developed buyer’s remorse as the New York market began looking like a hot mess, so the company said thanks but no thanks.
MedMen was left with its New York assets and found itself stuck with a property that few desire even as it put them back on the shelf to sell. Wonder what would’ve happened if MedMen had just taken the original price and closed on the deal before the New York market unraveled for MSOs?
Hell hath no fury like a scorned investor. Parallel Cannabis, which used to be called Surterra Wellness, found itself in the crosshairs with some of its investors. The investors sued the company, saying that, according to their investment agreement, Parallel couldn’t take on more debt – but it did.
The investors also claimed that the company CEO, gum scion Beau Wrigley, wasn’t being truthful with them. Wrigley ultimately lost his job as a result of the lawsuits. But the challenge is ongoing, and Parallel defaulted on that debt.
Despite that, Floridians can still go into a Parallel cannabis dispensary and buy medical marijuana. Bills, schmills. Only suckers pay their debts, right?
No money, no problem. High Times owes its lenders $28 million, but that hasn’t stopped the company from going on an acquisition spree. It bought Moxie Holdings and a consumption lounge this year, and it paid for the deals despite defaulting on its debt.
High Times also owes $5 million in back rent for a lease agreement it got stuck with when it bought some dispensaries from Harvest Health.
The legacy publisher started the year by watching its latest CEO, Peter Horvath, walk out the door and named Paul Henderson as CEO. Henderson’s also president and interim CFO. Busy guy!
The company extended its stock offering even though it can’t sell any stock until it updates its financials with the SEC. If all that wasn’t enough, High Times found itself embroiled in a stock promotion scheme with a fraudulent newsletter writer based in Florida.
Maybe the name should be changed to Not-So-High Times.
Dutchie Ditches Founders
Dutchie co-founders Ross and Zach Lipson found themselves dumped by their own company via a board coup. The Lipsons were fighting for control of the company after some board members became unhappy with their leadership.
While the Lipsons went into the fight thinking they had majority voting power, the board ditched one of their own and changed the balance. It then ditched the Dutchie founders and put themselves in charge.
The brothers are suing, saying that the board didn’t have that power and that they should be reinstated. The board, which was made up of several investors, believe they are in the right and will bring better leadership to the company.
Lesson learned: Don’t piss off the investors.
Tip Jar Jokes
It looks so simple. A tip jar on the counter for the bud tender. A little thank you for the cannabis concierge, who likely gets paid less than a living wage. Only it turns out the workers weren’t getting the tips.
Various companies, including Curaleaf and Bud’s Goods & Provisions, found themselves in hot water when employees complained they didn’t get their tips. Massachusetts landed on the side of the employees, who will get some money back from the company. Curaleaf argued that the workers were told not to put out a tip jar, but they did it anyway.
Here’s a tip: Pay employees enough so that a tip jar doesn’t have to become a thing.