High Supply, a Denver producer of child-resistant containers for marijuana products, has filed for bankruptcy protection, claiming the company’s “severe financial stress” was caused by “theft and corporate espionage by former employees.”
High Supply CEO Paul Lufkin is also suing a former co-owner and several formal employees, asserting they tried to launch another marijuana packaging firm in violation of a non-compete agreement, according to BusinessDen.com.
The case is the latest example of what is a growing trend: cannabis business partners falling out and then winding up on opposing sides in a courtroom. In July, for example, Bhang Chocolate in California lost an arbitration battle to former business partner Mentor Capital and eventually owed Mentor Capital more than $1.8 million.
According to High Supply’s Sept. 30 Chapter 11 filing, the company had accumulated $245,000 in debt. Lufkin and investors from Green Leaf Acquisitions bought High Supply from co-founder Justin Walker and Aaron Israel last year, paying $400,000 for the company, including stock, BusinessDen.com reported.
A lawyer for the defendants said High Supply’s financial troubles were the result of Lufkin’s “own poor customer service and decisionmaking since the sale was completed.” As for the non-compete, the attorney contends in a statement to BusinessDen that Walker is complying with the agreement and the ex-employees named in the suit are not subject to non-competes.