Multistate operator Verano Holdings faces a $135 million lawsuit in Nevada for alleged fraud in excluding its Nevada partners from a recent licensing round in which the Illinois-based firm won 11 additional recreational cannabis store licenses.
The suit, filed earlier this month by Naturex and BB Marketing in the state’s Eighth Judicial Court, alleges that Verano defrauded its Nevada partners into believing the licensing applications would include them as well as Verano.
The 11 claims include an allegation that Verano also misappropriated trade secrets in filing the applications.
George Archos, Verano’s CEO, said in a statement that “based on what we know of the allegations … we do not believe the complaint has merit. We intend to defend aggressively against these claims.”
Here are some key aspects of the complaint:
- Naturex owns and operates the Zen Leaf dispensary in Nevada. Half of Las Vegas-based Naturex is owned by a Nevada limited liability company called BB Marketing and half by a Verano entity.
- During summer 2018, the Naturex partnership decided that Verano would take the lead on the applications to be submitted in a new rec marijuana licensing round. The defendants claim Verano instead applied through its cultivation facility, Lone Mountain, and “cut out” the plaintiffs.
The $135 million in damages requested include:
- $10 million because of an alleged breach in fiduciary duties.
- $75 million in a lost equity stake in the new licenses.
- $50 million in lost cultivation sales to the dispensaries. (The Nevada group also owns a cultivation facility.)