FLORIDA GROWER SAYS POT COMPANY SABOTAGED APPLICATIONS

Law360 (April 14, 2021, 9:20 PM EDT) — A Florida nursery has alleged in a new lawsuit that Canadian cannabis company Tilray pulled a “bait and switch” in 2015, promising to use its industry expertise to help the grower secure a low-THC medical marijuana license only to intentionally sabotage the application.

The complaint, filed on Thursday in Washington state court, marks the latest development in a multipronged legal battle waged by Bill’s Nursery in connection with a years-old business agreement that fizzled out under Florida’s previous medical cannabis program.

As recounted in the complaint, Bill’s Nursery of Homestead, Florida, entered into an agreement with Privateer Holdings Inc., a predecessor of Tilray Inc., whereby Privateer would help bolster the nursery’s applications to the Florida Department of Health by drawing on the company’s expertise, best practices and standard operating procedures.

Bill’s Nursery and Privateer also agreed that if the grower was awarded a license, Privateer could exercise a $25,000 option for the right to buy the grower.

After Bill’s Nursery agreed to the deal, “Tilray produced a joke of an application that was composed of cursory, generic, well-known descriptions,” said the complaint, filed in King County Superior Court in Seattle. “For example, Tilray copied the substance of certain New York regulations almost word for word.”

Bill’s Nursery applied for a license in two dispensing regions of Florida. The applications were rejected, scoring  “dead last” in both  regions, according to the complaint.

The former head of the Florida Office of Medical Marijuana Use described the applications as ” ‘quite poor,’ ‘fairly short,’ containing ‘generic boilerplate information’ that ‘lacked specificity or cogency,’ ” of poor quality overall,  the complaint said.

Bill’s Nursery ultimately obtained a dispensary license in 2019 under the state’s revamped full-THC medical cannabis program, as part of a settlement with the health department following years of legal wrangling.

The license award prompted California-based cannabis holding company Left Coast Ventures Inc. to sue Bill’s Nursery in July 2019, claiming that it had acquired the option to buy the Bill’s Nursery dispensary from Privateer  once it had become licensed.

A trial court judge ruled in favor of Bill’s Nursery, finding that the option agreement became void after the denial of the 2015 applications, and accordingly dismissed the lion’s share of Left Coast’s claims with prejudice.

A Washington state appellate court later found that Bill’s Nursery received its 2019 license entirely thanks to the settlement reached with the Florida Department of Health, which favored unsuccessful applicants from prior years, and not because of a new review of the failed 2015 applications.

During discovery in that underlying lawsuit, Bill’s Nursery said it realized that Privateer had deliberately kneecapped its application, using boilerplate, nonspecific language rather than proprietary material over fears that a competitor could learn trade secrets in the application language, a “blueprint” to the business.  

“Contrary to its promise to [Bill’s Nursery] to leverage its expertise and put together the best application it could, Tilray was simply taking a bet that its well-known name would carry the day,” the nursery said in its complaint.

“This let Tilray cast its hat in the ring without any downside risk,” the complaint continued. “If its name carried the day, great. If it lost, the only downside was that it would lose the fees it paid to the DOH, a cost that didn’t even register on Tilray’s mega-balance sheet. “

Bill’s Nursery said Left Coast showed “chutzpah” by filing its lawsuit, which accused the grower of misappropriation of trade secrets and alleged that it received the 2019 license  only because of the expertise provided years earlier by Privateer. The Left Coast case is set to go to trial on the remaining claims in August. 

Velvel Freedman of Roche Freedman, an attorney for Bill’s Nursery, said in a statement Wednesday that Tilray “shouldn’t have bait-and-switched Bill’s Nursery …by promising the world but delivering junk work product.”

Freedman continued, “It certainly shouldn’t have then laid in wait for years as Bill’s Nursery fought alone to obtain a medical marijuana license, and then come out of the shadows to try and free-ride on Bill’s Nursery’s success through a meritless lawsuit predicated on tenuous legal technicalities. But that’s exactly what the complaint alleges Tilray’s predecessor did. It should be ashamed of itself.”

Bill’s Nursery alleges breach of contract, breach of the implied duty of good faith and fair dealing, breach of fiduciary duty and fraud, and is seeking unspecified damages, costs, fees and other relief.

Tilray did not immediately respond to a request for comment on Wednesday.

Bill’s Nursery and its owner, Stephen Garrison, are represented by Velvel Freedman, Constantine Economides and Colleen Smeryage of Roche Freedman LLP and Emanuel Jacobowitz of Arnold & Jacobowitz PLLC.

Counsel information for Tilray was not immediately available on Wednesday.

The case is Bill’s Nursery Inc. et al. v. Tilray Inc. et al., case number 21-2-04697-1, in the Superior Court of Washington, King County.

–Editing by Karin Roberts.

Update: The story has been updated with additional counsel information.

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