San Francisco-based Have a Heart dispensary was flipped among three different owners in two months. The company's CEO Alexis Bronson says none of the transactions is legal. Bronson owns 40% of the Have a Heart dispensary and he claims his business partners sold their shares to Interurban Capital Group without his approval.
The dispensary was then flipped to Harvest Health & Recreation (OTC:HARV), who just sold it to HHI Acquisition Corp, a subsidiary of Hightimes Holding Corp. also known as High Times. All of these transactions have occurred within an eight week time frame.
According to emails, Bronson told a person named Beau at Interurban Capital Group that his partners Todd Shirley and Ryan Kunkel had assigned their ownership interest to Core Competencies LLC . (a wholly-owned subsidiary of Interurban Capital Group) without his consent. Bronson denied the transfer of interest and provided proof of this. Kunkel is also the CEO of Interurban Capital Group and CEO of Have a Heart CC. The company did not respond to a request for comment.
Bronson had informed Interurban Capital Group that it had no authority to offer up the shares to Harvest Health. The company's response was that it was just due diligence discussions and that news in the press was often wrong.
"Oftentimes things of this nature never workout, which is why we don't advertise them to begin with. When and if we have anything of substance to share with you, I'll reach out," wrote an Interurban Capital Group spokesperson in an email.
Then on March 11, Harvest Health said it was acquiring Interurban Capital Group in a deal valued at $85 million. "We are excited to welcome the Have a Heart dispensaries into the Harvest family," said Harvest Chief Executive Officer Steve White. Almost immediately after that statement, Harvest Health laid off numerous Have a Heart employees. At the time, Harvest Health said that Interurban Capital Group would add to Harvest's existing retail footprint with three open retail locations and seven potential retail licenses in California, five open retail locations in Washington state and two open retail locations in Iowa.
It wasn't long before this deal went south. Harvest Health CEO Steve White spoke of some disagreements with Interurban Capital Group on the company's quarterly earnings call. However, he didn't describe what the disagreement was about, but White did say that he expected to "win that litigation". Could it be that he was referring to the litigation between Have a Heart and Interurban Capital Group over the purchase of this dispensary? Harvest health said it couldn't comment until the deals were closed.
Despite these actions, the High Times Purchase Agreement acknowledges the Bronson position in Have a Heart. The document states, "Neither ICG nor Harvest holds any rights to acquire the 40% interest held by Bronson. Assignment of Contingent Assignment requires consent of the Board of Managers of HAH 2 CA LLC." High Times was to deliver $1 million to Harvest Health on April 27 as a deposit and then an additional $4 million at the closing date or within 45 days of the effective date.
The assignment of the shares did not have the consent of the Board, so it's not clear why these companies kept passing around the ownership. High Times did not respond to a request for comment.
Boss Feels Like Victim
Bronson says was "a grateful recipient of the San Francisco Office of Cannabis social equity program." This program assists those harmed in the War Against Drugs. Bronson had a marijuana arrest and he teamed up with Interurban Capital Group for financial and managerial assistance. He also said that the San Francisco Police Code Article 16 sections 1608 stipulates that Kunkel's transfer of his 51% interest requires Bronson to promptly surrender the social equity cannabis license to the Director of the Office of Cannabis.
"As CEO, Owner and managing member I have a fiduciary responsibilities to my cannabis social equity business," said Bronson. "Yet there is this large divide between apparent authority and actual authority that puts my social equity business in a terrible (and arguably unsustainable) position -- from one side I have tremendous responsibility and potential liability and yet from the other side I've been kept in the dark regarding major business decisions and have been treated as nothing more than a straw CEO and rendered completely powerless."
Bronson didn't seem adverse to Kunkel transferring his shares in general, but he did express great displeasure at the entities Kunkel chose. The name Have a Heart now sounds like a cruel joke for Bronson who feels like he has been victimized twice. First by the war on drugs and second by what he described as "Caucasian Canna-Bro greed."