Katelyn Baker
Well-Known Member
A Desert Hot Springs marijuana grow collective spearheaded by the daughter of Hustler's Larry Flynt is being called "a bunch of smoke and mirrors" by an attorney suing the business contending it failed to pay three local companies nearly three quarters of a million dollars for their services. The marijuana company acknowledged its debts Monday, but said they were the result of a failed land deal and soon to be dealt with through the sale of a subsidiary.
In May 2016, Desert Hot Springs approved a $378,000 one-acre land sale to the Los Angeles-based Pineapple Express, LLC, a company on which Theresa Flynt has served as vice president of business development. A series of condominiums known as Pineapple Park north of San Gorgonio Lane that will be leased to new and existing "canna-businesses" are planned on the site, according to the company's website. The company also offers consulting, technology, investments, and branding concepts to these businesses, and has plans to launch a national brand of cannabis stores under the Pineapple Express name "as soon as federal laws allow."
"Pineapple Express is home to some of the most experienced and well-connected minds in the business, immediately placing entrepreneurs at the forefront of an industry that is foreign to most," the website states.
As of March 3, the company was estimating a June tenancy date for the part of its Desert Hot Springs facility that has already been constructed.
The lawsuit, filed by attorney Robert Gilliland, alleges that Pineapple Express and its subsidiaries breached their contracts with Coachella Valley businesses Orr Builders, Prest Vuksic Architects and MSA Consulting Inc., stiffing them on bills totaling almost $685,000 for their work designing and building Pineapple Park.
"These are all local companies, all good people," Gilliland said. "My clients did exactly as they were asked to do."
Pineapple Express CEO Matthew Feinstein said in an email Monday that the company's money problems originated in October, when a subsidiary purchase contract for an additional 4 acres of land and existing buildings was terminated by the United Pentecostal Church of Desert Hot Springs, the landowner and another defendant in the lawsuit. The subsidiary wasn't able to recoup any of the $1.5 million it spent in development costs and deposits to the church, Feinstein said.
After failed attempts to resolve the problem with the landowner amicably, the subsidiary was sold to another company, Pineapple Express announced Monday. The new company, which Feinstein did not name, has said it will address the land matter with the church and resolve unpaid debts to vendors that resulted.
"Our prior subsidiary paid over $800,000 in development costs prior to the parcel being sold to a third party by (the church) without our knowledge," Feinstein said. "That prior subsidiary had also accumulated upwards of $700,000 in unpaid development costs for the parcel. A dispute exists about whether the new owner of the parcel and ultimate beneficiary of the development costs should pay for them. Pineapple Express has identified a more cost effective alternative so that the company's contracted clients and future tenants can take possession of rental spaces within the next few months."
Gilliland said he views Pineapple Express as "a bunch of smoke and mirrors," due in part to its extensive marketing campaign, which often invoked the name of Larry Flynt, a pornography icon and First Amendment advocate, who invested $100,000 in his daughter's business in March 2016.
Gilliland said he plans to amend his clients' complaint to include allegations of fraud seeking punitive damages.
"It's unconscionable that they lead these hardworking business people to think they're flush with cash," he said. "It's all puff."
The lawsuit comes just less than a year after the U.S. Securities and Exchange Commission suspended trading on the company's stock for a day "because of recent, unusual and unexplained market activity in the company's stock that raises concerns about the adequacy of publicly-available information regarding the company."
On March 3, the company announced on its website that it had eliminated its chief officer position, replaced its Chief Financial Officer with a public accounting and compliance firm and retooled its operating budget in order to reduce overhead costs by $30,000 a month and expedite filing of its registration with the Securities and Exchange Commission to become a fully reporting company.
"As we transition to becoming a more seasoned company we are learning what it takes to save capital and resources while still implementing our business model," Feinstein said in a statement. "In this industry, it's always been a marathon and not a sprint."
Gilliland said he's open to working out a payment plan with all of the parties involved, but said the case is "very straightforward" in that defendants can either write a check, work out a payment plan or foreclose on the property.
"All (the plaintiffs) want is to get paid," he said.
Having an out-of-town company come into the valley, hire local companies and not pay them hurt the local economy, Gilliland said, especially in areas such as Desert Hot Springs. The formerly-bankrupt city currently has one operating marijuana cultivation facility and estimated in September that if every pot business approved by the city opened, the city could bring in more than well over $30 million a year in tax revenue. The city's current operating budget is around $15 million.
"This is all very new. A lot of cities ... are very excited about the possibility of obtaining tax money from these businesses which were formerly illegal," Gilliland said. "This is probably going to pop (Desert Hot Springs') bubble. This was their gold standard and unfortunately it's not gold."
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Pineapple Express Pot Company Sued Over $685K In Unpaid Bills, Attorney Says
Author: Anna Rumer
Contact: (760) 322-8889
Photo Credit: Anna Rumer
Website: The Desert Sun
In May 2016, Desert Hot Springs approved a $378,000 one-acre land sale to the Los Angeles-based Pineapple Express, LLC, a company on which Theresa Flynt has served as vice president of business development. A series of condominiums known as Pineapple Park north of San Gorgonio Lane that will be leased to new and existing "canna-businesses" are planned on the site, according to the company's website. The company also offers consulting, technology, investments, and branding concepts to these businesses, and has plans to launch a national brand of cannabis stores under the Pineapple Express name "as soon as federal laws allow."
"Pineapple Express is home to some of the most experienced and well-connected minds in the business, immediately placing entrepreneurs at the forefront of an industry that is foreign to most," the website states.
As of March 3, the company was estimating a June tenancy date for the part of its Desert Hot Springs facility that has already been constructed.
The lawsuit, filed by attorney Robert Gilliland, alleges that Pineapple Express and its subsidiaries breached their contracts with Coachella Valley businesses Orr Builders, Prest Vuksic Architects and MSA Consulting Inc., stiffing them on bills totaling almost $685,000 for their work designing and building Pineapple Park.
"These are all local companies, all good people," Gilliland said. "My clients did exactly as they were asked to do."
Pineapple Express CEO Matthew Feinstein said in an email Monday that the company's money problems originated in October, when a subsidiary purchase contract for an additional 4 acres of land and existing buildings was terminated by the United Pentecostal Church of Desert Hot Springs, the landowner and another defendant in the lawsuit. The subsidiary wasn't able to recoup any of the $1.5 million it spent in development costs and deposits to the church, Feinstein said.
After failed attempts to resolve the problem with the landowner amicably, the subsidiary was sold to another company, Pineapple Express announced Monday. The new company, which Feinstein did not name, has said it will address the land matter with the church and resolve unpaid debts to vendors that resulted.
"Our prior subsidiary paid over $800,000 in development costs prior to the parcel being sold to a third party by (the church) without our knowledge," Feinstein said. "That prior subsidiary had also accumulated upwards of $700,000 in unpaid development costs for the parcel. A dispute exists about whether the new owner of the parcel and ultimate beneficiary of the development costs should pay for them. Pineapple Express has identified a more cost effective alternative so that the company's contracted clients and future tenants can take possession of rental spaces within the next few months."
Gilliland said he views Pineapple Express as "a bunch of smoke and mirrors," due in part to its extensive marketing campaign, which often invoked the name of Larry Flynt, a pornography icon and First Amendment advocate, who invested $100,000 in his daughter's business in March 2016.
Gilliland said he plans to amend his clients' complaint to include allegations of fraud seeking punitive damages.
"It's unconscionable that they lead these hardworking business people to think they're flush with cash," he said. "It's all puff."
The lawsuit comes just less than a year after the U.S. Securities and Exchange Commission suspended trading on the company's stock for a day "because of recent, unusual and unexplained market activity in the company's stock that raises concerns about the adequacy of publicly-available information regarding the company."
On March 3, the company announced on its website that it had eliminated its chief officer position, replaced its Chief Financial Officer with a public accounting and compliance firm and retooled its operating budget in order to reduce overhead costs by $30,000 a month and expedite filing of its registration with the Securities and Exchange Commission to become a fully reporting company.
"As we transition to becoming a more seasoned company we are learning what it takes to save capital and resources while still implementing our business model," Feinstein said in a statement. "In this industry, it's always been a marathon and not a sprint."
Gilliland said he's open to working out a payment plan with all of the parties involved, but said the case is "very straightforward" in that defendants can either write a check, work out a payment plan or foreclose on the property.
"All (the plaintiffs) want is to get paid," he said.
Having an out-of-town company come into the valley, hire local companies and not pay them hurt the local economy, Gilliland said, especially in areas such as Desert Hot Springs. The formerly-bankrupt city currently has one operating marijuana cultivation facility and estimated in September that if every pot business approved by the city opened, the city could bring in more than well over $30 million a year in tax revenue. The city's current operating budget is around $15 million.
"This is all very new. A lot of cities ... are very excited about the possibility of obtaining tax money from these businesses which were formerly illegal," Gilliland said. "This is probably going to pop (Desert Hot Springs') bubble. This was their gold standard and unfortunately it's not gold."
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: Pineapple Express Pot Company Sued Over $685K In Unpaid Bills, Attorney Says
Author: Anna Rumer
Contact: (760) 322-8889
Photo Credit: Anna Rumer
Website: The Desert Sun
