A legal dispute pitting a Scotts Miracle-Gro subsidiary against an investment fund controlled by the executive chair of cannabis multistate operator TerrAscend has been settled, with the MSO-connected investment fund in effect agreeing to be bought out of a deal involving the purchase of a New York medical marijuana company.
RIV Capital, a Toronto-based investment firm bankrolled in part by the Hawthorne Collective, a cannabis-focused subsidiary of Scotts, announced the settlement in a news release Thursday.
Scotts has funded legalization efforts in the Northeast and is trying to enter the retail cannabis market in that part of the country.
Last March, RIV Capital announced it had struck a deal to purchase Etain Health for $247 million.
Etain is one of the 10 vertically integrated medical marijuana companies allowed in New York state under current law.
The company has locations in midtown Manhattan as well as upstate.
RIV used $150 million from Ohio-based Hawthorne to close the Etain deal.
While vertically integrated companies in New York are currently locked out of the adult-use market, over the long term, the state has the potential to become one of the largest marijuana markets in the U.S.
The legal wrangling over Etain stems from the fact that RIV Capital’s leading shareholder is Jason Wild, the executive chair of TerrAscend.
Wild holds almost 20% of RIV’s shares through an investment advisory firm he controls called JW Asset Management.
TerrAscend has licenses in six states, including New Jersey, where the company operates three stores “adjacent to” New York City, the company reported in an August 2022 investor deck.
That would put TerrAscend and Etain in competition for the cannabis market in the northern New Jersey-New York City metro area.
Last year, according to a lawsuit filed earlier this month by attorneys for Hawthorne against JW Asset Management, Wild “tried to stop” RIV’s purchase for “TerrAscend’s benefit” and in violation of federal antitrust law.
In its release Thursday, RIV Capital said it agreed in effect to pay Wild $19.6 million for the company’s shares “currently owned or controlled by” JW Asset Management “and its affiliates.”
RIV Capital also said the pending lawsuit had been settled.
In return, Wild “and JWAM have agreed, among other things, not to take any action that would interfere with” Hawthorne’s investment at RIV, according to the release.
An MJBizDaily request for comment sent to Hawthorne via the company’s attorney of record, Peter Safirstein, was not immediately returned.
Mark Sim, RIV’s president, said in a statement that the settlement will allow the company to “focus on continuing to operationalize New York, in addition to exploring a range of opportunities inside and outside of New York as we seek to build our platform going forward.”
Chris Roberts can be reached at email@example.com.