MariMed Sues Nevada Cultivation Company Over Lost Cannabis Licenses And $2.4M Stock Mismanagement

In a lawsuit filed in a Massachusetts federal court last week, cannabis operator MariMed Inc. MRMD has accused Nevada cultivation company The Harvest Foundation LLC of license violations ahead of a multimillion-dollar sale.

What Happened: According to MariMed, Harvest owners Larry Lemons and Donnie Burton were responsible for actions that led to the company's licenses being revoked by the Nevada Cannabis Compliance Board (NCCB) back in 2021, reported Law 360.

"MariMed learned that the NCCB had suspended all of Harvest’s cannabis licenses due to the negligent and willful actions of the defendants in violation of Nevada law," the lawsuit states. The alleged violations include a failure to report facility break-ins, employing underage workers and a lack of reporting for missing cannabis, all of which MariMed claims it was unaware of during the sale process.

See Also: Employee Poaching Controversy Heats Up Among Top US Cannabis Companies

According to the Green Report Market, the sale process initially slowed due to a backlog at the NCCB and delays caused by the COVID-19 pandemic, had MariMed agreeing to purchase Harvest for $2.4 million in stock.

However, as a result of the license suspensions, the NCCB is now selling Harvest’s assets and MariMed has found itself seeking damages for unjust enrichment, promissory estoppel and fraudulent misrepresentation.

MariMed is also demanding the return of the one million shares of MariMed stock issued to Lemons and Burton as part of the sale agreement. In 2018, during MariMed's nationwide expansion of its portfolio of dispensaries and growers, it brokered a deal with Lemons and Burton to acquire their operation and cannabis license.

Despite the dip in the common stock price, which is now hovering around $0.40 cents per share, Burton and Lemons have reportedly refused to return the company shares and have instead attempted to sell them.

Price Action: MariMed Inc MRMD is $0.3805 per share on Tuesday morning.

Compliance with state-issued cannabis regulations is crucial in the industry. If you are interested to know more about these topics consider joining us at the Benzinga Cannabis Capital Conference, the place where deals get done, which is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

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