California cannabis grower sues another under federal racketeering statutes

medical cannabis in california

In what may be a potential first for the marijuana industry, a Southern California cannabis farmer filed suit against another grower in federal court and is attempting to use anti-racketeering laws to back up the legal claims.

In a lawsuit filed in U.S. District Court in the Central District of California, Santa Barbara County businesswoman Francine Shulman and her company, Iron Angel, contend that the operators of Vertical Companies, a Los Angeles-based marijuana cultivation firm, defrauded her and stole her property.

The 126-page lawsuit outlines 25 different counts of alleged wrongdoing, ranging from conspiracy and racketeering to breach of contract and elder financial abuse – the latter charge because Shulman is a 66-year-old grandmother.

Shulman’s suit against Vertical seeks at least $200 million in damages.

The suit follows an initial legal action by Vertical Companies, which sued Shulman in Santa Barbara Superior Court earlier this year in an effort to enforce a cultivation lease on land owned by Shulman.

Vertical said in a statement that Shulman had been ordered on June 19 – a day before she filed her Racketeer and Influenced and Corrupt Organizations (RICO) suit – to participate in arbitration related to the cultivation-lease lawsuit that Vertical had filed against her.

“We believe that this action is an attempt to transform a non-newsworthy, typical business dispute into sensational allegations of a wide-reaching conspiracy, with the intent of making salacious allegations of criminal conduct in public court filings,” Vertical Companies President Smoke Wallin said in a statement.

“We strongly refute the … allegations.”

While the RICO statutes have provided the basis for several lawsuits in recent years against marijuana companies – with varying degrees of success – they were typically utilized by cannabis opponents in attempts to shut down MJ operations, as opposed to being used by former business partners to win financial disputes.

John Schroyer can be reached at [email protected]

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8 comments on “California cannabis grower sues another under federal racketeering statutes
  1. Pat on

    Just an expression of the symptom’s, of a much larger problem: Ca. “law” has its basis in rackets. And no one in ( gov. ) power seems to give a damn.

  2. mike on

    ca gov has confused and complicated a simple economic endeavor to bring a newly legalized product to market. get them fighting among themselves which will eliminate more of those trying to do legal business which is the gov goal: confuse and over regulate a growing industry until some big corps will donate enough campaign contributions and the gov will declare it a mess and that privatizing is the only answer. then big corps will be the only ones with enough cash to take over. big pharma can make meds and overcharge with scripts like they do now and dispensaries will be run and regulated and taxes paid like liquor stores do now.

  3. madeleine johnson on

    I support Francine Shulman a 100% all the way to the Supreme Court. Greed does not pay and these developers took full advantage of a 66 year old California Senior by trying to steal her land. Lock Them Up and Throw The Key Away.

    • A little rabbit on

      There is overwhelming amount of people that will come forward to testify that vertical was pumping black market sales out while not performing for the brands they signed up. Now time to find the cash

  4. Laura Patterson on

    What is sadly not mentioned enough is the amount of public corruption involved at the SB County level. Powerful black market operators, wolves in sheeps clothing, pay for public officials to look away from illegal operators who have used lobbyists to grease the pockets of County supervisors, Planning & Development senior staff, law enforcement, etc., all the while crushing the legitimate business minded people with over regulations, insidious inspections up the kazoo, to the literal extent of harassment with buzzing choppers and incessant inspections. Yet, the dirty dudes get left alone. You don’t pay, you don’t play. Lack of proper vetting and law enforcement of the bad guys is intentional. Follow the money. It is truly sickening.

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