A New Jersey medical marijuana company gained back some control of its operations Wednesday when a court ruled that the cannabis giant who invested in it and then allegedly tried to take control must take some steps back.
MPX NJ, which received a license in 2018 to grow marijuana in Pleasantville and dispense it in Atlantic City, filed a suit in the Superior Court of Monmouth County last week against iAnthus. The license holder claimed iAnthus has hijacked its operations after investing $10 million, attempting to negotiate deals with state and local officials and undertake unauthorized construction at the growing facility.
Under the strict constraints of New Jersey’s medical marijuana program, only the license holder can make such moves. MPX NJ is one of just two entities licensed in 2018 that has yet to open.
iAnthus and MPX NJ have several entanglements. The head of MPX NJ, Beth Stavola, worked as an iAnthus executive but resigned earlier this year. The companies have also entered into a master services agreement that would over time move ownership from MPX NJ to iAnthus, but it has yet to receive approval from the state Department of Health.
On Wednesday morning, Judge Joseph Quinn issued an initial order that states iAnthus will not represent itself as MPX NJ without disclosing the pending agreement before the health department or enter into contracts that bind MPX. It provides interim relief on the case, which will resume in January.
iAnthus must also inform Stavola of all contracts and construction at the Pleasantville cultivation site, and avoid additional unauthorized construction in parts of the facility where marijuana is being grown.
“It certainly is our intention to work something out here,” Paul Josephson, an attorney representing iAnthus, said during the remote hearing. “I don’t think there’s anybody on either side who wants to jeopardize this permit. I think and I hope that’s a shared goal of the parties.”
iAnthus operates more than 30 marijuana dispensaries throughout the country. Under the order, it can continue construction at the site, something it celebrated Wednesday afternoon.
“We are very pleased with the results of today’s hearing and appreciate that the Court recognized the importance of the continued, uninterrupted build out of the Pleasantville cultivation facility,” Randy Maslow, iAnthus’ president and interim CEO, said in a statement. “iAnthus is committed to finishing construction of the facility on an expedited schedule and to working with MPX NJ to open the Atlantic City dispensary and two additional satellite locations as quickly as possible to give South Jersey patients more choices and access. We anticipate that any remaining issues with MPX NJ will be resolved and not delay operations.”
The lawsuit alleges iAnthus has misled people about Stavola’s continued role in the company in attempts to leverage her name and reputation in other states. It also claims iAnthus employees have misrepresented themselves in trying to negotiate a deal on a cannabis production fee with Pleasantville as part of a host city agreement.
In October, iAnthus allegedly told the health department it intended to seize MPX NJ, but did not inform Stavola, according to the lawsuit.
Josephson said Stavola has proven difficult to reach since she left the company.
“She needs to work with her former colleagues,” he said.
New Jersey has only licensed 12 medical marijuana companies to operate, making the licenses incredibly competitive and valuable.
Matt Platkin, former chief counsel to Gov. Phil Murphy, is representing MPX NJ along with former New Jersey attorney general Chris Porrino and Justin Corbalis.
“The only reason why they can do anything at the site…is because MPX is one of the very few license holders, permit holders, to conduct that activity,” Platkin said during the hearing. “Any activity that goes on there needs to occur with the knowledge and consent of the permit holder.”
Platkin, who appeared on behalf of MPX NJ Wednesday, did not immediately respond to a request for comment on the order.
iAnthus has recently struggled financially, losing $301 million in 2019. But it did see revenue rise from $3.4 million in 2018 to $78.3 million, according to annual company filings.
The company’s former CEO, Hadley Ford, resigned in April after a company investigation found he failed to disclose two loans totaling $160,000 that constituted a “potential or apparent” conflict of interest, according to the company.
