Denver marijuana packaging firm files for bankruptcy

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 decision-making 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.

5 comments on “Denver marijuana packaging firm files for bankruptcy
  1. pam on

    I see a lot of advertisements for grow classes which the industry doesn’t really need. The industry needs business classes for those who have been growing successfully for decades. Operating Agreements, Option Agreements, Terms of Service, Expectations of Employment of Partners, NDA.. create a clause for every verbal agreement made.

    Reply
  2. Todd Wheeler on

    As a business coach I see this all the time in every industry. The Cannabis industry is no different. Companies don’t plan to fail but they do fail to plan. Discussing as many issues as could possibly happen BEFORE they happen is what we must do. The trick is understanding all the things that need to be put on the table and finding possible solutions for them before they happen.
    Todd Wheeler
    Colorado Cannabis Consultants
    [email protected]

    Reply
  3. The CannaVestor on

    Expect to see a lot of cannabis startups go broke in the coming months and years. It is part of the normal business cycle that any emerging market experiences. The same thing happened with high and the dotcoms and it even happened at the dawn of the auto and oil industries.

    In Oregon there are now more licensed marijuana dispensaries in Portland alone than there are liquor stores in the entire state. Does anyone really believe that we need a pot shop on every other street corner throughout the city? Of Course not. Some will survive but far more will fail.

    As the marijuana market is mainstreamed and demand becomes more ubiquitous, the product itself will be commoditized and like all commodities the price will drop to the lowest level that will justify production.

    Marijuana will be no different from a six pack of beer. The price will be set by the market at a certain level for any given grade of product and if you can’t compete at that price point you will soon be out of business.

    Reply

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