Cannabis investors sue Colorado companies over failed Michigan operation
BOULDER — Investors in a marijuana grow and retail business in Michigan have filed suit against the Boulder-based company and its founder that created an entity in the Great Lakes State that subsequently foundered.
The plaintiffs alleged in the lawsuit, filed Tuesday in Boulder County District Court, that they invested $9 million in the cannabis operation called Terrapin Investment Fund III LLC, a spinoff of Terrapin Care Station, the trade name for Genetic Locker Inc. The lawsuit alleged that Terrapin and its principal Christopher Woods represented that it would build a cannabis farm, processing center and retail dispensary in Grand Rapids, Michigan. After operations began in 2020 and especially in 2021 and continuing into January 2022, the company began to make distributions to Terrapin’s members, including significant amounts to Woods himself as majority owner, the lawsuit said.
The lawsuit alleged that those distributions were ill-advised. “As a result of gross negligence, willful misconduct, self-dealing and other misconduct, neither Woods nor Terrapin had accurate visibility to Terrapin’s finances,” the lawsuit said.
The plaintiffs also alleged that defendants “billed and paid overstated and falsified management fees … that were significantly higher than what was represented to investors.” A table included in the lawsuit shows billed fees to be, in 2020 through 2022, more than $1 million more per year than forecast.
The Michigan operation shut down in September 2022 with notice given to investors that assets would be used to pay vendors and debt, including $2.46 million due to Woods’ management company, Renaissance Solutions Inc.
The lawsuit alleged, among other allegations, breach of contract and civil theft by Woods, Terrapin and Renaissance.
The lawsuit seeks a jury trial and a judgment in an amount determined at trial.
Peter Marcus, vice president of communications for Terrapin, said that the company had not been served with the suit and would be unable to comment. He did say that the Michigan development was “heartbreaking that it didn’t work out” and that “it has nothing to do with Colorado.”
The case is Porche-Andrus Holdings LLC et al., v. Christopher Woods, Terrapin Investment Fund III LLC, Renaissance Solutions Inc. and John Doe #1-12, filed in Boulder County District Court as 2022c30882.
Source: BizWest
